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Question
In developing/poor countries marginal propensity to consume is _____.
In developing/poor countries marginal propensity to consume is _____.
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Solution
The correct option is D high
In poor countries, it is likely that citizens have very low incomes, thus all or most of their income earned is spent on fulfilling their basic needs such as food, water, shelter etc. They then have very little to no saving left as a result of this. Thus the marginal propensity to consume is relatively higher in poorer countries.
In poor countries, it is likely that citizens have very low incomes, thus all or most of their income earned is spent on fulfilling their basic needs such as food, water, shelter etc. They then have very little to no saving left as a result of this. Thus the marginal propensity to consume is relatively higher in poorer countries.
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