Question:
Which of the following statements is/are CORRECT in the context of the Absolute Income Hypothesis?
Which of the following statements is/are CORRECT in the context of the Absolute Income Hypothesis?
Updated On: Oct 1, 2024
- The marginal propensity to consume (MPC) is a constant
- As income increases, the average propensity to consume (APC) tends to approach the marginal propensity to consume (MPC)
- Average propensity to consume (APC) increases as income increases
- Current saving/dis-saving has no bearing on future consumption
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The Correct Option is A, B, D
Solution and Explanation
The correct options is (A): The marginal propensity to consume (MPC) is a constant, (B): As income increases, the average propensity to consume (APC) tends to approach the marginal propensity to consume (MPC) and (D): Current saving/dis-saving has no bearing on future consumption
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