Which of the following is correctly matched?
| 1. | Propensity to consume | A. | Zero |
| 2. | MPC + MPS | B. | 1 |
| 3. | Aggregate demand | C. | Ratio of consumption to income |
| 4. | Inflation | D. | Consumption is zero |
Answer & explanation
Correct answer: option 2
The sum of marginal propensity to save and marginal propensity to consume is 1
i.e. MPS + MPC = 1