Correct Answer: MPC + MPS = 1
Subject: economics
Explanation: • <b>Key Fact</b> The Marginal Propensity to Consume (MPC) plus Marginal Propensity to Save (MPS) equals 1. • <b>Supporting Detail</b> If MPC = 0.6, then MPS = 0.4. • <b>Related Concept</b> Every extra unit of income is either consumed or saved. • <b>Why wrong options are wrong</b> The total additional income splits perfectly into consumption and saving, so they add up to 1, not multiply or subtract. • <b>Exam Trick</b> Consume + Save = 100% (or 1). • <b>Additional Info</b> Taxes reduce the disposable income, impacting the absolute amount but this equation holds for disposable income.
Loading Gyaanify...