Maharashtra State BoardHSC Arts 12th Board Exam
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Give Reasons Or Explain the Following Statement: In a Rich Country Marginal Propensity to Consume is Less. - Economics

Give reasons or explain the following statement: 

In a rich country marginal propensity to consume is less.

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Solution

In rich countries, the people tend to save more due to various motives such as motive of independence, foresight, calculation, etc. Due to this, the people in rich countries tend to consume less with rising incomes. This in turn result in lower marginal propensity to consume.

Concept: Diminishing Marginal Utility
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