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Reference.org
Marginal propensity to save
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<p>The marginal propensity to save (MPS) is the fraction of an increase in <a href="/facts/Income/T1B63U7z">income</a> that is not spent and instead used for <a href="/facts/Saving/UweDJ5Rr">saving</a>. It is the slope of the line plotting saving against income. For example, if a household earns one extra dollar, and the marginal propensity to save is 0.35, then of that dollar, the household will spend 65 cents and save 35 cents. Likewise, it is the fractional decrease in saving that results from a decrease in income. </p><p>The MPS plays a central role in <a href="/facts/Keynesian_economics/t4nVlVDw">Keynesian economics</a> as it quantifies the saving-income relation, which is the flip side of the consumption-income relation, and according to <a href="/facts/Keynes/4otHjBRu">Keynes</a> it reflects the <a href="/facts/Fundamental_psychological_law/bUnQHa69">fundamental psychological law</a>. The marginal propensity to save is also a key variable in determining the value of the <a href="/facts/Multiplier_(economics)/sXCUGhyx">multiplier</a>. </p>