Marginal Propensity to Save Calculator

Understanding Marginal Propensity to Save (MPS)

The Marginal Propensity to Save (MPS) is an economic metric quantifying the fraction of an increase in personal disposable income that a consumer saves rather than spends.

Formula for Calculating MPS

MPS is computed as the ratio of change in savings ($\Delta S$) to the change in income ($\Delta Y$):

$$\text{MPS} = \frac{\Delta S}{\Delta Y} = \frac{S_2 - S_1}{Y_2 - Y_1}$$

Relation to Marginal Propensity to Consume (MPC)

Since income is divided between savings and consumption, MPC and MPS are complementary:

$$\text{MPS} + \text{MPC} = 1 \implies \text{MPC} = 1 - \text{MPS}$$

The Keynesian multiplier varies inversely with MPS:

$$\text{Multiplier} = \frac{1}{\text{MPS}}$$