Three of the following expressions describe the marginal propensity to save (MPS). Which one is the odd one out?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → S/Y
MPS is the change in saving per unit change in income: ΔS / ΔY. Since MPC + MPS = 1, it is also 1 − c.
Option (1) ΔS/ΔY — Describes MPS. It is the change in saving over the change in income.
Option (2) S/Y — Odd one out. S / Y is saving per unit of income. That is the APS.
Option (3) 1 – c, where c is the MPC — Describes MPS. MPS = 1 − c.
Option (4) The change in savings per unit change in income — Describes MPS. This is the definition of MPS.
MPS and APS are different. MPS uses the change in saving and income; APS uses their levels.
NCERT (2026-27): “Some Definitions Marginal propensity to save (MPS): it is the change in savings per unit change in income. It is denoted by s and is equal to 1 − c. It implies that s + c = 1. |