In dealing with Propensity to consume, Keynes considered two attributes:

APC and MPC

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Income and consumption

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Solution

The correct option is B APC and MPC
In dealing with Propensity to consume, Keynes considered two attributes:
1. APC : APC refers to Average Propensity to Consume which defines the amount of consumption in every 1 rupee of income for all level of income.
Average propensity to consume = C/Y where C is the consumption and Y is the income in the economy

2. MPC: Marginal Propensity to consume refers to the percentage change in consumption for every one rupee of change in the income. It is the ratio between the change in income and corresponding change in consumption.
Marginal propensity to consume = ΔC/ΔY where ΔC is the Change in consumption and ΔY is the change in income in the economy.

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Similar questions

Q. If national income is Rs. 90 crore and Consumption expenditure Rs. 81 crore, find out average propensity to save. When income rises tot 100 crore and consumption expenditure to Rs. 88 crore. What will be the marginal propensity to consume and marginal propensity to save?

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Q. Answer in detail.
Explain Keynes subjective and objective factors influencing consumption function.

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