Question

If MPC is 0.75, calculate the value of MPS.

Answer 1

Marginal propensity to save refers to the percentage change in savings for every one rupee of change in the income. Similarly, marginal propensity to consume refers to the percentage change in consumption for every one rupee of change in the income.

$MPC+MPS$

$=\frac{△C}{△Y}$ + $\frac{△S}{△Y}$

$=\frac{△C+△S}{△Y}$

$=\frac{△Y}{△Y}$
$MPC+MPC=1$
$MPS=1-MPC$

$=1-0.75$

$=0.25$