The formula to calculate the Marginal Propensity to Save (MPS) is:
MPS=dSdI
Where:
MPS, known as Marginal Propensity to Save, is a measure of how much extra money a person saves when they receive an increase in income. It is the proportion of any additional income that is saved rather than spent. The higher the MPS, the more likely a person is to save additional income rather than spend it.
Let's assume the following values:
Using the formula to calculate MPS:
MPS=2001000=0.20
The Marginal Propensity to Save (MPS) is 0.20.