Final answer:
The marginal propensity to save is equal to one minus the marginal propensity to consume. If the MPC is 0.9, then the MPS is 0.1. This reflects how households divide additional income between consumption and savings.
Step-by-step explanation:
Marginal propensity to save (MPS) is the proportion of an increase in income that gets saved instead of spent on consumption. MPS varies by income level and is typically higher at higher incomes. The marginal propensity to save (MPS). The correct answer to the question is 'b', which states that the marginal propensity to save is equal to one minus the marginal propensity to consume (MPC). This is according to the basic macroeconomic identity that MPC + MPS = 1. If, for example, the MPC is 0.9, it necessarily follows that the MPS will be 0.1, since together they add up to 1.
To put this into context, if a household has a marginal propensity to consume of 0.9, it means that for every additional dollar of income earned, the household spends 90 cents on consumption and saves the remaining 10 cents. Therefore, for every extra dollar, a savings of 10 cents implies that the marginal propensity to save is 0.1, or 10%.