Question:
Which of the following statements is incorrect about marginal and average propensity to save?
Which of the following statements is incorrect about marginal and average propensity to save?
Updated On: Nov 4, 2024
- Value of marginal propensity to save ranges from 0 to 1
- The sum of average propensity to save and marginal propensity to save is always equal to one
- At the break-even point, income and consumption are equal
- Value of average propensity to save rises with increase in income
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The Correct Option is B
Solution and Explanation
The sum of APS and MPS is not always equal to one. The correct relationship is APS + APC = 1, or MPS + MPC = 1.
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