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Marginal Propensity to Save

Marginal Propensity to Save (MPS) is the ratio of change in total saving to change in total disposable income,



For example, total saving in an economy increases from Rs. 2,000 crore to Rs, 5,000 crore, and total disposable income raises from Rs, 10,000 crore to Rs. 20,000 crore. Then, the MPS will be calculated as follows:

MPS = ΔS/ΔY  =  Rs. 3,000 crore / Rs. 10,000 crore  = 0.3 or 30%

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