B What is the marginal propensity to save If hired to create

B) What is the marginal propensity to save? If hired to create three economic incentives that would cause it to increase, what would they be?

Solution

B.

Marginal propensity to save (MPC) is the change in savings due to the change in income. The value of marginal propensity to save lies between 0 and 1.
Sum of MPS and MPC is equal to 1.
MPS = 1- MPC
Three economic incentives to increase the MPS are as follows:
1.   Tax benefits upon the savings that encourages people to save more.
2.   Giver higher interest upon the savings that will encourage people to save more and earn more.
3.   Offer retirement income to the people that will depend upon the saving done today. So, people will save more.