Asked by Christian Poncio on May 12, 2024
Verified
When disposable income is 2,000,the APC is
A) .4.
B) .5.
C) .8.
D) 1.0.
E) 1.2.
APC (Average Propensity to Consume)
The fraction of income that households plan to spend on goods and services; it is the ratio of total consumption to total disposable income.
- Comprehend the theories of marginal propensity to consume (MPC) and save (MPS), as well as their importance for economic conduct.
Verified Answer
SH
Sakib HajinaMay 14, 2024
Final Answer :
D
Explanation :
The Average Propensity to Consume (APC) is calculated as the total consumption divided by total disposable income. An APC of 1.0 indicates that all disposable income is spent on consumption, which is a plausible scenario, unlike the other options which suggest spending more than the available income or a multiplication factor.
Learning Objectives
- Comprehend the theories of marginal propensity to consume (MPC) and save (MPS), as well as their importance for economic conduct.