Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Determination of Income and Employment

Question:

When is the value of average propensity to save negative?

Options:

When savings are equal to income 

When consumption is more than the income

When income is more than the consumption

None of the above

Correct Answer:

When consumption is more than the income

Explanation:

The average propensity to save equals to the ratio of total saving to total income. Value of average propensity to save will be negative when savings are negative i.e. we  have dis-savings. Dis-savings are done when there is no income and all the basic expenses (autonomous consumption) are done with the help of past savings i.e. consumption is more than the income.