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Can the average propensity to consume be greater than one? Explain with the reason.
Can the average propensity to consume be greater than one? Explain with the reason.
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Average propensity to consume can be greater than one when the consumption exceeds the income. At that degree average propensity to save would be negative. APC would be greater than one if, the APS is negative. For instance, if the income is ₹. 1,000/-, consumption is ₹. 1,200/-. Then APC = 1200/1000 = 1.20.