Q. 145.0( 1 Vote )

A hig

Answer :

High propensity to consume is a virtue, while a high propensity to save is not. This statement is explained below:

a. Consumption leads to an increase in demand and is considered to be an injection in the circular flow of income in an economy.


b. Increased demands lead to an increase in the production of goods and services.


c. This increases the level of induced investment.


d. So, a high propensity to consume is a virtue.


e. Savings lead to a decrease in demand and is considered to be a leakage in the circular flow of income in an economy.


f. The reduced demands lead to a fall in the production of goods and services.


g. This decreases the level of induced investment.


h. So, a high propensity to save is not considered to be a virtue.


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