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SSC Sample Paper SSC (Group-C) Sample Test Paper-9

  • question_answer
    Over shori period, when income rises, average propensity to consume usually

    A)  rises               

    B)  falls

    C)  remains constant       

    D)  fluctuates

    Correct Answer: B

    Solution :

     Keynes postulated that aggregate consumption is a function of aggregate current disposable income. The Keynesian consumption function is written as: \[C=a+cY\text{ }a>\text{ }0,\text{ }0<c<1;\]where a is the intercept, a constant which measures consumption at a zero level of disposal income; c is the marginal propensity to consume (MPC); and Y is the disposal income. So as income increases, average propensity to consume (APC = C/Y) falls.


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