Propensity example sentences

We call this fraction the marginal propensity to save (mps).Within the present framework, if we take different values of the marginal propensity to consume and calculate the values of the two multipliers, we find that the tax multiplier is always one less in absolute value than the government expenditure multiplier.Since consumption is the complement of savings (additional income of the economy is either put into additional savings or used for extra consumption by the people), if we subtract the mps from 1, we get the marginal propensity to consume (mpc), which, in a similar way, is the fraction of total additional income that people use for consumption.Since m, the marginal propensity to import, is greater than zero, we get a smaller multiplier in an open economy.The rate of increase in ex ante consumption due to a unit increment in income is called marginal propensity to consume.