A) rises
B) falls
C) remains constant
D) fluctuates
Correct Answer: B
Solution :
Keynes postulated that aggregate consumption is a function of aggregate current disposable income. The Keynesian consumption function is written as: \[C=a+cY\text{ }a>\text{ }0,\text{ }0<c<1;\]where a is the intercept, a constant which measures consumption at a zero level of disposal income; c is the marginal propensity to consume (MPC); and Y is the disposal income. So as income increases, average propensity to consume (APC = C/Y) falls.You need to login to perform this action.
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