Investments glossary

Marginal Propensity to Save (MPS)

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In Keynesian economic theory, the marginal propensity to save (MPS) refers to the proportion of an aggregate raise in income that a consumer saves rather than spends on the consumption of goods and services. Put differently, the marginal propensity to save is the proportion of each added dollar of income that is saved rather than spent. MPS is a component of Keynesian macroeconomic theory and is calculated as the change in savings divided by the change in income, or as the complement of the marginal propensity to consume (MPC).

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