Question

State whether the following statements are True or False with reasons:

 Increase in consumption expenditure is less than increase in income. 

 

Answer 1

True, increase in consumption expenditure is less than increase in income.
Explanation:
According to the Keynesian Psychological law of consumption, when there is an increase in income, the consumption expenditure also increases. However, the increase in consumption expenditure is less than the increase in income.