A) Proportionate increase in consumption is less than proportionate increase in income
B) Increase in income is equal to increase in consumption
C) Increase in consumption is greater than increase in income
D) Consumption does not change with a change in income
Correct Answer: B
Solution :
Keynes? Psychological law of consumption: Keynes put forward a psychological law of consumption, according to which, as income increases, consumption increases but not by as much as the increase in income.
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