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      Question

      The ratio of total additional planned savings in an

      economy to the total additional income of the economy is known as:
      A Marginal propensity to consume (MPC) Correct Answer Incorrect Answer
      B Savings rate Correct Answer Incorrect Answer
      C Marginal propensity to save (MPS) Correct Answer Incorrect Answer
      D Consumption rate Correct Answer Incorrect Answer

      Solution

      Β·Β  Marginal propensity to save (mps) is a fraction which gives an idea of what proportion of the total additional income of the economy people wish to save as a whole. It gives us the ratio of total additional planned savings in an economy to the total additional income of the economy). Β· Subtracting the mps from 1, we get the marginal propensity to consume (mpc), which, in a similar way, is the fraction of total additional income that people use for consumption.

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