Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Determination of Income and Employment

Question:

According to the Keynesian economics, the value of APC can never be.

Options:

Zero

Unity

More than one

Less than one

Correct Answer:

Zero

Explanation:

The correct answer is option (1) : Zero

APC refers to Average Propensity to Consume which defines the amount of consumption in every 1 rupee of income for all level of income which can never be equal to zero as consumption can never be equal to zero even when income is zero in the economy. Even at the zero level of income we will consume something i.e. autonomous consumption.

The value of APC can be more than 1. At low levels of income, consumption tends to be more than income.