What is the maximum value of average propensity to save ?
Answer & explanation
Correct answer: option 3
The correct answer is option (3) : Less than Unity
Less than Unity: This is a possible value for APS and often reflects typical saving behavior where individuals save a portion of their income.
APS can never be 1 because savings can never be equal to income as people spend a part of income on consumption.
APS cannot exceed 1 because savings cannot exceed income.