2
Question
Which among the following is a type of propensity to save?
Which among the following is a type of propensity to save?
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Solution
The correct option is D Both A & B
Marginal
Propensity to save refers to the percentage change in savings for every one
rupee of change in the income. It is the ratio between the change in income and
its corresponding change in savings.
Marginal propensity to save = ΔS/ΔY where ΔS is the Change in savings and ΔY is the change in income in the economy.
APS refers to
Average Propensity to save which defines the amount of savings in every 1 rupee
of income for all level of income.
Average propensity to save = S/Y where S is the savings and Y is the income in the economy.
Marginal Propensity to save refers to the percentage change in savings for every one rupee of change in the income. It is the ratio between the change in income and its corresponding change in savings.
Marginal propensity to save = ΔS/ΔY where ΔS is the Change in savings and ΔY is the change in income in the economy.
APS refers to
Average Propensity to save which defines the amount of savings in every 1 rupee
of income for all level of income.
Average propensity to save = S/Y where S is the savings and Y is the income in the economy.
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