Match List-I with List-II
List-I List-II (A) Average Propensity to Consume (I) It is the savings per unit of income (B) Marginal Propensity to Consume (II) It is the consumption per unit of income (C) Average Ppropensity to Save (III) It is the change in savings per unit change in income (D) Marginal Propensity to Save (IV) It is the change in consumption per unit change in income.
Choose the correct answer from the options given below:
Match List-I with List-II
| List-I | List-II |
|---|---|
| (A) Average Propensity to Consume | (I) It is the savings per unit of income |
| (B) Marginal Propensity to Consume | (II) It is the consumption per unit of income |
| (C) Average Ppropensity to Save | (III) It is the change in savings per unit change in income |
| (D) Marginal Propensity to Save | (IV) It is the change in consumption per unit change in income. |
Choose the correct answer from the options given below:
Solution
Option 1: (A) - (II), (B) - (IV), (C) - (I), (D) - (III) -> Average Propensity to Consume (APC) = C/Y represents consumption per unit of income. Marginal Propensity to Consume (MPC) = ΔC/ΔY represents change in consumption per unit change in income. Average Propensity to Save (APS) = S/Y represents savings per unit of income. Marginal Propensity to Save (MPS) = ΔS/ΔY represents change in savings per unit change in income. The terms 'Average' refer to ratios (per unit), while 'Marginal' terms refer to rates of change (change per unit change). -> correct
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