Marginal propensity not to spend is the fraction of any increment to national income that does not add to desired aggregate expenditure. If marginal propensity to spend is denoted by Z. then marginal propensity not to spend would be given by (1 – Z). Not spending some part of income implies withdrawal or leakage from the circular flow of income. Therefore, marginal propensity not to spend is also known as marginal propensity to withdraw.

In the example considered above, the marginal propensity to spend is 0.60, i.e., if national income increases by Re. 1, then 60 paisa will go into increased spending (Re. I – 60 paisa) = 40 paisa constitutes marginal propensity not to spend, i.e., it will equal I – 0.60 = 0.4.

In a two-sector model, marginal propensity not to spend would equal marginal propensity to save. But in a three-sector model and a four sector model, the two would be different.

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