Question
The fraction of any change in income not consumed is, by definition, the to . This explains why the marginal propensity to consume plus this fraction of any change equals one.
Answers
GPT-4o mini
The fraction of any change in income not consumed is, by definition, the **marginal propensity to save (MPS)**. This explains why the marginal propensity to consume (MPC) plus the MPS of any change equals one, as they reflect the total change in income being either consumed or saved:
\[
MPC + MPS = 1
\]
Thus, if individuals increase their income and choose to consume a certain fraction of that increase, the remainder that is not consumed is saved, represented by the MPS.
\[
MPC + MPS = 1
\]
Thus, if individuals increase their income and choose to consume a certain fraction of that increase, the remainder that is not consumed is saved, represented by the MPS.