AP MacroeconomicsAggregate Demand & Supply
Marginal Propensity to Save (MPS)
The marginal propensity to save (MPS) is the fraction of each additional dollar of disposable income that households save.
It ranges between 0 and 1 and, together with the marginal propensity to consume, always sums to 1. A higher MPS means a smaller spending multiplier. It measures how much of new income leaks out of the spending stream.
Formula / Example
MPS = ΔSaving ÷ ΔDisposable income; MPS = 1 − MPC.
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