Match List-I with List-II
List-I List-II (A) MPS (I) (B) MPC (II) (C) APC (III) (D) Consumption function (C) (IV)
Choose the correct answer from the options given below:
Match List-I with List-II
| List-I | List-II |
|---|---|
| (A) MPS | (I) |
| (B) MPC | (II) |
| (C) APC | (III) |
| (D) Consumption function (C) | (IV) |
Choose the correct answer from the options given below:
Solution
Option 1 -> MPS as C̄ + cY is incorrect; MPS = 1 - c, not the consumption function.
Option 2 -> MPS as C/Y is incorrect; that's APC, not MPS.
Option 3 -> MPS as C/Y and APC as ΔC/ΔY are both incorrect matches.
Option 4 -> Correctly matches all: MPS = 1 - c (proportion of additional income saved), MPC = ΔC/ΔY (change in consumption per unit change in income), APC = C/Y (ratio of total consumption to total income), and Consumption function = C̄ + cY (autonomous consumption plus induced consumption).
Hence, Option 4: (A) - (III), (B) - (IV), (C) - (I), (D) - (II) -> MPS (Marginal Propensity to Save) equals 1 - c where c is MPC, representing the fraction of additional income that is saved. MPC (Marginal Propensity to Consume) is ΔC/ΔY, showing how consumption changes with income. APC (Average Propensity to Consume) is C/Y, the ratio of total consumption to income. The Consumption function C = C̄ + cY shows total consumption as autonomous consumption (C̄) plus income-dependent consumption (cY). -> correct
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