When consumer spending exceeds disposable income, all of the following are true except: a

Marketing Dec 24, 2020

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.

Expert Solution

The incorrect statement is d. The MPS is negative.

Explanation:

The marginal propensity to save refers to the change in the household savings with a change in the income level. The marginal propensity to consume can never be negative as if the household consumes all the additional income, the marginal propensity to save will be zero but can never be negative.

Archived Solution

Unlocked Solution

You have full access to this solution. To save a copy with all formatting and attachments, use the button below.

Already a member? Sign In

Important Note: This solution is from our archive and has been purchased by others. Submitting it as-is may trigger plagiarism detection. Use it for reference only.

For ready-to-submit work, please order a fresh solution below.

Or get 100% fresh solution

Get Custom Quote