Marginal Propensity to Save (MPSv)

Marginal Propensity to Save (MPSv) shows what percentage of additional income a consumer saves.

Scenario: Johnny gets a raise, and his income rises by $100. He saves $20 of his additional income. What's his marginal propensity to save?

MPSv = Change in Saving / Change in Income

Change in Saving = $20
Change in Income = $100

MPC = $20 / $100
MPC = 0.20

Answer: For each additional dollar of income Johnny earns, he will save $0.20 (or 20%) of it.

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