explain why the MPC and the MPS must always add up to one?

Question

these question about the macroeconomics today and the keynesian model.

Answer 1

"c. marginal propensity to consume (MPC)

1) definition
The fraction of any change in disposable income spent for consumer goods;
Equal to the change in consumption divided by the change in disposable income.
2) formula

MPC = change in C /change in income

d. marginal propensity to save (MPS)

1) definition
The fraction of any change in disposable income which households save;
Equal to the change in saving divided by the change in disposable income.
2) formula

MPS = change in S /change in income

3) MPC + MPS = 1"


MPC + MPS < 1 is simply not possible. Money wil be either spent (C) or saved (S).

MPC + MPS > 1 is not sustainable. Spending and saving more than your income is the path to bankruptcy. On a macro scale this is economic collapse.

Answer 2

Try a different category. We are scientists here, not economists....sorry!