Which statement is true?

Question

Quizplus · Accepted Answer

APC (average propensity to consume) is defined as consumption divided by income, and APS (average propensity to save) is defined as saving divided by income.

If APC is greater than one, it means that consumption is greater than income, which implies that saving is negative (since income minus consumption equals saving). Therefore, APS is negative.

Option B is incorrect because if APC is less than one, it means that consumption is less than income, which implies that saving is positive. APS can be positive or negative, depending on the value of APC.

Option C is incorrect because APS can indeed be negative, as explained in option A.

Option D is incorrect because option A is true.

Which Statement Is True