Q.Define Marginal Propensity to Save (MPS).

MPS is the fraction of a small change in income that goes into extra saving: MPS = ΔS / ΔY. When income rises, a household saves part of the increase and spends the rest. The Marginal Propensity to Save captures the saving part of that additional income. - Formula: MPS = ΔS / ΔY, where ΔS is the change in saving and ΔY is the change in income. - Its value normally lies between 0 and 1 (a household neither saves nothing extra nor saves the whole rise). - MPS is the complement of the Marginal Propensity to Consume (MPC): MPS + MPC = 1, because every extra rupee of income is either consumed or saved. - Example: if income rises by 1,000 and saving rises by 200, then MPS = 200 / …