Final answer:
The marginal propensity to consume (MPC) represents the share of additional income allocated to consumption expenditures, while the marginal propensity to save (MPS) represents the share allocated to savings. MPC + MPS always equals 1.
Step-by-step explanation:
The marginal propensity to consume (MPC) is the share of the additional dollar of income that a person decides to devote to consumption expenditures. The marginal propensity to save (MPS) is the share of the additional dollar that a person decides to save.
For example, if the MPC is 0.9, it means that out of every additional dollar earned, 90% will be spent on consumption, while the remaining 10% will be saved.
MPC + MPS = 1, so if the MPC is 0.9, the MPS will be 0.1, and vice versa.