When consumer spending exceeds disposable income,all of the following are true except
A)The APS is negative.
B)The APC is greater than 1.
C)Households are dissaving.
D)The MPS is negative.

Question

Quizplus · Accepted Answer

The Marginal Propensity to Save (MPS) cannot be negative. MPS is the proportion of an additional dollar of household income that is used for saving. If consumer spending exceeds disposable income, it means households are dissaving or spending savings, but MPS reflects the change in saving rate with respect to income, not the total amount saved, and thus cannot be negative.

When Consumer Spending Exceeds Disposable Income,all of the Following Are