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Marginal Propensity to Save

The marginal propensity to save (MPS) is the change in household saving resulting from a change in household disposable income. For example, if disposable income increases by £2,000 and saving rises by £500, then the MPS = £500/£2,000 = 0.25.

The marginal propensity to save + the marginal propensity to consume out of disposable income (Yd) always equals 1.

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