The value of marginal propensity to save is always positive.

True

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False

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Solution

The correct option is
A

True

True. Marginal propensity to save is the ratio between additional saving and additional income which is always positive because of a positive relationship between saving and income. The value of MPS can never be negative. It varies between 0 and 1.

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Similar questions

Giving reasons state whether the following statements are true or false:

(a) When marginal propensity to consume is zero, the value of investment multiplier will be 1.

(b) If the ratio of marginal propensity to consume and marginal propensity to save is 4: 1, the value of investment multiplier will be 4.

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