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| 1. |
Which of the following cannot have a negative value ? Give reasons. (i) Average propensity to save (ii) Marginal propensity to save Hint : (i) APS can have a negative value because at very low level of income, there is dissaving, (ii) MPS cannot have a negative value as it is the ratio of `DeltaSandDeltaYandDeltaS` can never be negative. |
| Answer» 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. | |