Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Determination of Income and Employment

Question:

Read the passage carefully and answer the questions based on the passage:

Calculate various parameters of Aggregate Demand, Aggregate Supply and related concepts

Income (in Crore)

Consumption (in crore)

0

50

50

75

100

100

200

150

300

200

400

250

When income is more than consumption, then value of Average Propensity to Save (APS) is.

Options:

More than zero.

Equal to zero.

Less than zero.

More than one.

Correct Answer:

More than zero.

Explanation:

The correct answer is Option (1) → More than zero.

 

  • Average Propensity to Save (APS) = Saving / Income

  • Saving = Income – Consumption

  • When income is more than consumption, savings are positive, so:

    APS = Positive Saving/ Positive Income = Positive Value

Thus, the value of APS is more than zero when income exceeds consumption.

Example from the table:

At income = ₹200 crore and consumption = ₹150 crore:
Saving = 200 – 150 = ₹50 crore
APS = 50 / 200 = 0.25 → More than zero.