Suppose autonomous consumption is 3000,induced consumption is 500 and disposable income is 2500.We may conclude that the

Question

Quizplus · Accepted Answer

Autonomous consumption is the consumption that occurs regardless of the level of income, in this case, it is 3000.
Induced consumption is the consumption that depends on the level of income, in this case, it is 500.
Disposable income is the income that is available for consumption after taxes are paid, in this case, it is 2500.

The APC (Average Propensity to Consume) is the ratio of consumption to disposable income, which is (3000+500)/2500 = 1.4. Since this value is greater than zero, the APC is positive.

The APS (Average Propensity to Save) is the ratio of saving to disposable income, which is (2500-3500)/2500 = -0.4. Since this value is less than zero, the APS is negative.

Therefore, the correct answer is C, where APC is positive and APS is negative.

Suppose Autonomous Consumption Is 3000,induced Consumption Is 500 and Disposable