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Answer the Following Question. Which of the Two, Average Propensity to Consume Or Average Propensity to Save, Can Be Negative, and Why? - Economics

Short Note

Answer the following question.
Which of the two, average propensity to consume or average propensity to save, can be negative, and why?

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Solution

Average Propensity to Save can be negative. It is negative in the situation when savings are negative or when consumption is greater than income ( When past savings are used for consumption). Average Propensity to Consume can never be negative because is the ratio of consumption and income and consumption can never be negative.

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