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The value of can be… (Class 12 Economics SQP 2023-24, Q3)

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EconomicsCBSE Class 12 · Sample paper, session 2023-24 · 1 mark · MCQ

CBSE Class 12 Economics sample paper 2023-24: question 3

From the official CBSE sample question paper for 2023-24, section A, question 3, for 1 mark. Try it first; the hints and our step-by-step solution are below.

Q3 · 1 mark · MCQDetermination of Income and Employment

The value of __________ can be greater than one. (Choose the correct alternative to fill up the blank)

  1. (A)Marginal Propensity to Consume
  2. (B)Average Propensity to Consume
  3. (C)Marginal Propensity to Save
  4. (D)Average Propensity to Save

Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2023-24.

Hints

Open one hint at a time and try again before the next.

Hint 1

What happens to C/Y at very low income?

Hint 2

Autonomous consumption is spent even at zero income.

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. MPC, MPS and APS cannot exceed 1 (APS can even be negative).

  2. APC = C/Y exceeds 1 below the break-even income, when consumption is greater than income (dissaving). So APC can be greater than one. Option (B).

    1 mark

Answer: (B) Average Propensity to Consume

Where the marks are

  • APC > 1 below break-even (1 mark)

Revise the chapter

Practise this chapterBoard-style questions from Determination of Income and Employment, one at a time, marked against the answer key and marking points.Back to the full paperSample paper 2023-24: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.