-Refer to the above diagram.The average propensity to consume:
A) is greater than 1 at all levels of disposable income above $100.
B) is greater than 1 at all levels of disposable income below $100.
C) is equal to the average propensity to save.
D) cannot be determined from the information given.

Question

-Refer to the above diagram.The average propensity to consume:
A) is greater than 1 at all levels of disposable income above $100. 
B) is greater than 1 at all levels of disposable income below $100. 
C) is equal to the average propensity to save. 
D) cannot be determined from the information given.

Quizplus · Accepted Answer

The average propensity to consume (APC) is the ratio of consumption to disposable income. If APC is greater than 1, it means consumption is greater than income, which typically occurs at lower income levels.

-Refer to the Above Diagram