Question

If the value of Average Propensity to Save (APS) is 0.2 and National Income is ₹ 4,000 crores, then consumption will be ______.

Options

• ₹ 4,000 crores

• ₹ 3,200 crores

• ₹ 3,800 crores

• ₹ 2,600 crores

Answer 1

If the value of Average Propensity to Save (APS) is 0.2 and National Income is ₹ 4,000 crores, then consumption will be ₹ 3,200 crores.

Explanation:

APS = `"S"/"Y"`

0.2 = `"S"/(4,000)`

S = 0.2 × 4,000

S = ₹ 800 crores

C = Y − S

= ₹ 4000 − ₹ 800

= ₹ 3,200 crores