Which one of the following is true?
A) APC + MPS = 1
B) APC + APS = 1
C) MPS + APS = 1
D) APC * APS = 1

Question

Quizplus · Accepted Answer

APC (average propensity to consume) is the ratio of consumption expenditure to total income while APS (average propensity to save) is the ratio of saving to total income. Therefore, APC + APS = 1. MPS (marginal propensity to save) is the change in savings resulting from a change in income while keeping consumption constant, and it is not directly related to the equation. D is not correct because APC and APS are ratios and multiplying them would not result in 1.

Which One of the Following Is True