ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Negative value of APS always implies negative value of MPS
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true
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false
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Either A or B
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None of the above
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Explanation:
Detailed explanation-1: -False. MPS can never be negative.
Detailed explanation-2: -Answer: False. Value of APS has no relationship with MPS.
Detailed explanation-3: -APS can never be 1 or greater than 1. That said, APS can have a negative value if income is zero and consumption has a positive value. For example, if income is 0 and consumption is 30, then the APS value will be-0.3.
Detailed explanation-4: -(a) At zero level of income, savings are positive. (b) The relationship between multiplier and MPC is inverse and that with MPS is direct. (c) The value of APC varies from 1 to infinity. (d) The value of MPS can be negative.
There is 1 question to complete.