Economists are generally concerned about the rising Marginal Propensity to Save (MPS) in an economy . Explain why?

Economists are generally concerned about the rising Marginal Propensit

1.	Economists are generally concerned about the rising Marginal Propensity to Save (MPS) in an economy . Explain why?
Answer» SOLUTION :Since the sum of MPC and MPS is unity (MPC+MPS=1) ,any increase in Marginal Propensity to Save (MPS) would directly lead to adecrease in Marginal Propensity to CONSUME(MPC). This means that lesser proportion of additional income is going to CONSUMPTION, which is a vital factor of AGGREGATE Demand/ Expenditure.. This may further lead to a fall in equilibrium level of income in the economy. Due to this fact, Economist are generally concerned about the rising MPS in an economy.

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Economists are generally concerned about the rising Marginal Propensity to Save (MPS) in an economy . Explain why?

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