Question

Which of the following points establish the relationship between MPS and MPC?

Options

• MPC + MPS = 1

• MPC = 1 − MPS

• MPS = 1 − MPC

• All of the above

Answer 1

All of the above

Explanation:

The amount of money saved is determined by the level of consumption. As a result, MPC determines the MPS level. The product of the MPC and the MPS is always one.

MPC + MPS = 1

Or, MPC = 1 − MPS

Or, MPS = 1 − MPC