If real disposable income increases, the average propensity to consume will
A) initially increase, and then decrease.
B) remain constant.
C) increase.
D) decrease.

Question

Quizplus · Accepted Answer

When real disposable income increases, the average propensity to consume (APC), which is the fraction of income spent, typically decreases because individuals tend to save a higher proportion of their income as it grows.

If Real Disposable Income Increases, the Average Propensity to Consume