ECONOMICS
CONSUMERS
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
0.2 and 0.8
|
|
|
0.6 and 0.4
|
|
|
0.3 and 0.7
|
|
|
0.8 and 0.2
|
Detailed explanation-1: -Average propensity to consume= Consumption/ Income. Was this answer helpful?
Detailed explanation-2: -The average propensity to consume is the percentage of income spent, while the average propensity to save is the percentage of income saved. Higher average propensity to consume signals greater economic activity as consumers are demanding goods and services.
Detailed explanation-3: -The average propensity to consume (APC) is the ratio of consumption expenditures (C) to disposable income (DI), or APC = C / DI. The average propensity to save (APS) is the ratio of savings (S) to disposable income, or APS = S / DI. 1.
Detailed explanation-4: -Thus if APC is greater than one (APC >1 ), then APS must be negative (APS < 0), this implies that the person must be borrowing to finance the consumption.