Which of the following statements are true:
(A). Average propensity to consume is the change in consumption per unit to change in income.
(B). Ex-ante depicts what has been planned.
(C). Ceteris paribus means 'other things remain equal'.
(D). Ex-post depicts what has actually happened.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (B), (C) and (D) only
(A). Average propensity to consume is the change in consumption per unit to change in income. (False). Average Propensity to Consume (APC) is defined as total consumption divided by total income (APC=C/Y). Marginal Propensity to Consume (MPC) is defined as the change in consumption per unit change in income (MPC=ΔC/ΔY). Therefore, statement (A) incorrectly defines APC; it describes MPC.
(B). Ex-ante depicts what has been planned. (True)."Ex-ante" refers to anticipated or planned economic variables.
(C). Ceteris paribus means 'other things remain equal'. (True). This is a standard assumption in economic analysis to isolate the effect of one variable.
(D). Ex-post depicts what has actually happened. (True)."Ex-post" refers to actual outcomes or realized values.