If, in an economy, income is ₹ 250 cro

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Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Determination of Income and Employment

Question:

If, in an economy, income is ₹ 250 crores and savings are ₹ 150 cores, calculate Average Propensity to Consume.

Options:

0.6

0.4

0.3

0.2

Correct Answer:

0.4

Explanation:

The correct answer is Option 2: 0.4

Consumption = Income – savings

Consumption = 250 – 150 = 100

APC = $\frac{Consumption }{ Income}$

APC = $\frac{100 }{250 }$

APC = 0.4