Question

Value of marginal propensity to save can never be negative. True/false

Answer 1

True, since MPS - $\Delta S/\Delta Y$, The individual may at the most spend the entire $\Delta$Y so that $\Delta$ Y=0. So, MPS can at the most be zero. MPS i.e. Marginal Propensity to Save cannot be less than zero as it is a percentage change in saving when there is some change in the level of income which cannot be less than the change in income.