Q. 17

The consumption f

Answer :

APC=C/Y


C=consumption


Y=Income


Given: Equilibrium Income


C = 40 + 0.8 Y


Given APC=1


• 1=40+0.8Y/Y


• Y=40+0.8Y


• 0.2Y=40


• Y=200


So when income is 200, APC will be 1.


OR


Average propensity to save(APS) is the ratio of saving to the level of saving income. It can never be 1 or more than 1 because savings can never be equal or more than the national income. However, APS can be negative or less than 1 because when income levels are lower people will consume less.


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