The Importance of Marginal Propensity to Consumer and Marginal Propensity to Save

4 pages | 930 words

This essay discusses two important concepts in economics: marginal propensity to consumer (MPC) and the marginal propensity to save (MPS). It explains what these terms mean and how they are calculated, and it discusses the Keynesian theory of consumption, which is a theory that explains how MPC and MPS are determined. The essay also talks about the consumption function, which is a mathematical equation that shows the relationship between MPC and MPS. Finally, it discusses some real-world applications of these concepts, such as disposable income and crowding out.