Question

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

Answer 1

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.