InterviewSolution
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InterviewSolution
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what is the relationship between MPC and MPS? Explain ? |
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Answer» sum of MPC and MPS is always equal to 1. How ? Income (Y) is ether consumed ( C) or saved ( S) . Therefore ,Y=C+S. increase in income `(Delta Y) ` is equal to increase in concumption `(Delta C) ` and increase in saving `(Delta S) .So Delta Y =Delta C+ Delta S.` Dividing both sides by `Delta `Y , we get `(DeltaY) /(DeltaI) =(DeltaC)/(Delta Y) +(DeltaS)/(DeltaY)` `1=MPC+MPS` |
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