If there is a decrease in disposable income in an economy, then:
A) Both the APC and the APS rise
B) The APC rises and the APS falls
C) The APC falls and the APS rises
D) Both the APC and the APS fall

Question

Quizplus · Accepted Answer

When disposable income decreases, people tend to spend a larger proportion of their income, causing the Average Propensity to Consume (APC) to rise, while the Average Propensity to Save (APS) falls.

If There Is a Decrease in Disposable Income in an Economy