Question

Psychological law of consumption states that "as income goes on increasing, the consumption also increases but at a rate less than increase in income.

• A. True
• B. False

Answer 1

The correct option is A True

True.

J.M Keynes explained the relationship between Consumption(C) and Income(Y) through the psychological law of consumption that stated, "as income goes on increasing, the consumption also increases but at a rate less than increase in income because there is always a part of income which is saved for future uncertainties".