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Question

Marginal consumption function is always ________.

A
zero
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B
one
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C
more than one
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D
less than one
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Solution

The correct option is D less than one
Marginal consumption function is calculated by diving the change in consumption level by change in income level. in normal situation change in consumption cannot be greater than the change in income level.As th denominator is greater than the numerator the marginal consumption fuction is always less than one.

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