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When will the vlaue of APC, APS, MPC and MPS be |
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Answer» Solution :(a) zero (i) AP C is never zero because of C at zero level of income (ii) APS is zero when consumption (C ) = Income (Y). (iii) MPC is zero when `DELTAS= DeltaY` (iv) MPS is zero when `DeltaC=DeltaY` (b) One (i) APC is one when C = Y (Break-even point) (ii) APS is never one because of positive consumption expenditure even at zero level MPC is one when `DeltaC=DeltaY` (iv) MPS is one when `DeltaS=DeltaY` (c )greater than one (i) APC is more than one when `C gt Y` APS is never more than one because savings cannot be more than income MPC is never more than one because `DeltaC` can never be more than to `DeltaY` (iv) MPS is never more than one because `DeltaS` can never be more than `DeltaY` (d) less than zero (negative) APC can never be negative because of `BAR(C)`. (ii) APS can negative when `C gt Y`. (iii) MPC can never be negative because `DeltaS`can never be more than `DeltaY`. (iv) MPS can never be negative because `DeltaC` can never be more than `DeltaY`. |
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