Explanation:

In economics, the term "MPS" or Marginal Propensity to Save refers to the proportion of an additional amount of income that is saved rather than spent. The formula for MPS is:

MPS = change in savings / change in income

On the other hand, the term "MPC" or Marginal Propensity to Consume refers to the proportion of an additional amount of income that is spent rather than saved. The formula for MPC is:

MPC = change in consumption / change in income

Both MPS and MPC are important concepts in macroeconomics and are used to understand how changes in income affect spending and saving behavior of individuals and households.

However, the coefficient (1-b) is also known as MPS because it represents the proportion of additional income that is saved rather than spent. This can be derived from the consumption function, which is expressed as:

C = a + bY

where C is consumption, Y is income, a is autonomous consumption, and b is the MPC.

If we rearrange the equation, we get:

Y = (1/b)C - (a/b)

This equation shows the relationship between income and consumption, and we can see that the slope of the line is equal to (1/b), which is the reciprocal of the MPC.

Therefore, the coefficient (1-b) represents the proportion of income that is not consumed but saved, and is equivalent to the MPS.

In summary, the coefficient (1-b) is also known as MPS because it represents the proportion of additional income that is saved rather than spent.

As in consumption function = C(constant) + bYHere b is MPC.... (i) nd the relation between MPC and MPS is MPS + MPC =1 thus we can say that MPS = 1 - MPC ... (ii) So 1 - b = 1 - MPC (i) that means MPS (ii)