Yes, APS can be negative when S is negative or when C > Y. On the other hand, APC can not be negative because Average propensity to consume is the ratio of consumption expenditure to a level of income and consumption cannot be negative.
Can APS and APC be negative and why?
The sum of APC and APS is always equal to unity (1), i.e., APC + APS = 1. It is so, because income is either consumed or saved. Apparently if one is given, the other can be worked out. The value of APS can be negative when consumption expenditure becomes higher than income .
Can APC ever be zero?
APC can never be equal to zero as consumption can never be zero at any level of income.
Can the value of APS be negative give reason?
APS can be negative because at very low level of income, there is dissaving i.e when income is less than consumption . MPS can never be negative because it tells the ratio of change in savings to change in income.
Can MPS can be negative?
APS can be negative when the consumption is more than the national income but MPS cannot be negative . It is the ratio of the change in savings to the change in income. It refers to the slope of the saving function which is always positive due to the positive relationship between the 2 variables.
What is difference between APC and APS?
The average propensity to consume (APC) is the ratio of consumption expenditures (C) to disposable income (DI), or APC = C / DI. The average propensity to save (APS) is the ratio of savings (S) to disposable income, or APS = S / DI .
Can APS be greater than APC?
Yes, APC can be greater than one . This generally happens in such situations where the level of income is so low that consumption is greater than income. ... APS, on the other hand, cannot be greater than one because of the fact that saving is always less than income. Similar to MPC, MPS also cannot be greater than one.
Can the value of APC be zero or negative?
| Value APC MPS | Negative (less than 0) No, due to presence of c No, as ∆C can never be more than ∆Y. | Zero No, due to presence of c Yes, when AC = ∆Y | One Yes, when C = Y, i.e. at BEP. Yes, when AS = ∆Y | More than One Yes, when C >Y, i.e. before BEP. No, as ∆S can never be more than ∆Y. |
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What is the difference between APC and MPC?
Distinction between APC and MPC:
(i) Total consumption expenditure divided by total income is APC. ... The change in consumption expenditure divided by change in income is MPC. (ii) When income increases, both APC and MPC fall but MPC falls more rapidly.
Can value of APC be greater than 1?
Yes , the value of APC can be more than 1. At low levels of income, consumption tends to be more than income.
Why can’t MPC be negative?
No, neither MPS nor MPC can ever be negative because MPC is the ratio of change in the consumption expenditure and change in the disposable income . In other words, MPC measures how consumption will vary with the change in income.
Can APS be negative and when?
Yes, APS can be negative in situations when S is negative , i.e. when consumption exceeds income, e.g. Y = 50, C = 100 . APS can never be 1 or greater than 1. ... For example, if income is 0 and consumption is 30, then the APS value will be -0.3.
Can change in savings be negative?
To the left of break-even point, savings are negative (-) indicating consumption being more than income whereas to the right of break-even point, savings are positive (-K) indicating consumption expenditure being less than income.
What does a negative MPS mean?
A normal test is negative, meaning that you don’t have any Plasmodium parasites in your blood . A positive result means that you have the parasites in your blood and that you may have malaria.
Can APC be negative Class 12?
Can the value of APC be less than zero? Answer: No , because even at the zero level of income, we will consume something i.e., autonomous consumption.
What is the maximum value of MPS?
Maximium value of MPS is 1 which can be achieved when all of the additional income is saved.
