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"As income increases, consumption expenditure does not increase at the same rate as income", Why? |
Psychological behavior of person to not spend the whole incremental income on consumption. Sociological behavior of peer pressure for spending lavishly. Flow of goods and services is not proper in rural areas and India is a rural nation. All of the above |
Psychological behavior of person to not spend the whole incremental income on consumption. |
As income increases, consumption also increases but at a proportionately lesser rate. It is psychological behavior of person to not spend the whole incremental income on consumption. As a rational consumer, he tends to save a part of his income. |
