Question

Economists are generally concerned about rising marginal propensity to save (MPS). Explain.

Answer 1

This is because MPS is inversely related to investment multiplier. Higher the MPS, higher will be the leakages from the circular flow of income which will not flow in the economy, An investment made will not generate a higher amount of income because there will be lesser consumption and lesser inducement for the producers to produce further goods due to piling up of stocks.