Determine the marginal propensity to save
If disposable income increases from Rs. 1,000 to Rs. 1,100, savings increase by Rs. 30. Determine the marginal propensity to save and marginal propensity to consume?
Expert
ΔY = 1,100 -1,000 = 100, ΔS = 30, MPS = ΔS/ΔY = 30/100 = 0.30
1- MPS = MPC
That is, 1 - 0.30 = 0.70 = MPC.
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