Identify the maximum value of Marginal Propensity to Save :

1

The correct answer is option (2) : 1

The Marginal Propensity to Save (MPS) represents the proportion of additional income that a household saves rather than spends. The possible values for MPS range from 0 to 1.

Maximum Value:The maximum value of MPS is 1. This means that for every additional unit of income, the entire unit is saved, and none is spent. In mathematical terms, MPS =$\frac{ΔS}{ΔY}=\frac{ΔSaving}{Δlncome }= 1. $

Minimum Value:The minimum value of MPS is 0. This indicates that none of the additional income is saved, and the entire income is spent. In mathematical terms, MPS = $\frac{ΔS}{ΔY}=\frac{ΔSaving}{Δlncome }= 0. $