Final answer:
The marginal propensity to consume (MPC) and the marginal propensity to save (MPS) sum to 1. To find MPS when MPC is given, subtract the MPC from 1. Hence, if MPC is 0.75, MPS would be 0.25.
Step-by-step explanation:
When considering the relationship between the marginal propensity to consume (MPC) and the marginal propensity to save (MPS), it is essential to understand that these two factors are complementary and must always sum to 1. If, for example, the MPC is 0.9, this means that out of an additional amount of income, an individual is likely to spend 90% on consumption. Consequently, the MPS, which represents the portion of additional income saved, would be 1 - 0.9 = 0.1, or 10%. This is because individuals either consume or save their additional income, and these two actions encompass all possible uses for this income.
Therefore, if the government spent $50 billion on infrastructure upgrades and if the MPC is given, then the MPS can be easily calculated by subtracting the MPC from one. The formula for MPS would thus be MPS = 1 - MPC. For instance, if the MPC is 0.75, then the MPS would be 1 - 0.75 = 0.25, or 25%.