Option d is correct answer....as (1-b) indicates MPS in the saving function

Explanation:

The coefficient (1-b) measures the slope of the saving function.

Understanding the saving function:
The saving function is an economic concept that represents the relationship between the level of income and the amount of saving in an economy. It is expressed as S = Y - C, where S is saving, Y is income, and C is consumption. The saving function shows how saving changes as income changes.

Understanding the coefficient (1-b):
In the saving function, the coefficient (1-b) represents the slope of the saving function. It is derived from the consumption function, which shows how consumption changes as income changes. The consumption function is expressed as C = a + bY, where a is the autonomous consumption and b is the marginal propensity to consume.

The coefficient (1-b) is derived by subtracting the marginal propensity to consume (b) from 1. The marginal propensity to consume represents the fraction of additional income that is consumed rather than saved. Therefore, subtracting it from 1 gives us the fraction of additional income that is saved rather than consumed.

Interpreting the coefficient (1-b):
The coefficient (1-b) measures the slope of the saving function. It tells us how much saving changes for a given change in income.

- If the coefficient (1-b) is positive, it means that saving increases as income increases. In other words, as income rises, people save a higher proportion of their income.
- If the coefficient (1-b) is negative, it means that saving decreases as income increases. In other words, as income rises, people save a lower proportion of their income.
- If the coefficient (1-b) is zero, it means that saving does not change with changes in income. In other words, people save a constant proportion of their income regardless of the level of income.

Therefore, the coefficient (1-b) is a crucial measure in understanding the slope of the saving function and how saving behavior changes with income. It helps economists analyze the impact of income changes on saving patterns and make predictions about future saving levels in an economy.