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Economic Definition of MPS. Defined.

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Term MPS Definition: The abbreviation for marginal propensity to save, which is the proportion of each additional dollar of household income that is used for saving. Or alternatively, this is the change in saving due to a change in disposable income. The marginal propensity to save is the slope of the saving or propensity-to-save line. It also takes center stage for the multiplier effect. In particular, the inverse of the MPS is the simple expenditure multiplier. The sum of the marginal propensity to save and the related concept, the marginal propensity to consume, is equal to one.


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