The Marginal Propensity to Save (MPS)is the

question 139

Multiple Choice

The marginal propensity to save (MPS) is the

• A) amount of saving that is later consumed.
• B) fraction of additional income that is saved.
• C) part of consumption spending that does not depend on income.
• D) total amount of income that is saved.

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Definitions:

Break-Even Point

The point at which the amount of goods produced or sold results in revenues that are exactly equal to the costs, leading to no profit or loss.

Contribution Margin Ratio

The percentage of revenue remaining after deducting variable costs, indicating how much revenue contributes towards covering fixed costs and generating profit.

Variable Costs

Expenses that fluctuate with the level of production output, such as raw materials and direct labor.

Fixed Costs

Expenses that remain constant in total amount irrespective of fluctuations in the activity level of a business, e.g., insurance premiums.