Commerce Exam > Commerce Questions > The value of APS can be negative whena)The va...
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The value of APS can be negative when
- a)The value of consumption expenditure becomes higher than income.
- b)The value of consumption is equal to the value of income
- c)The value of consumption is less than the value of income
- d)The value of consumption does not exceed the value of income
Correct answer is option 'A'. Can you explain this answer?
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The value of APS can be negative whena)The value of consumption expend...
Between APS and MPS, the value of APS can be negative when consumption expenditure becomes higher than income.
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The value of APS can be negative whena)The value of consumption expend...
Explanation:
Consumption Expenditure vs. Income
- The value of Average Propensity to Save (APS) measures the proportion of income that is saved rather than spent on consumption.
- APS can be negative when the value of consumption expenditure becomes higher than income.
- This means that individuals are spending more than they earn, leading to negative saving.
- When consumption expenditure exceeds income, it is an unsustainable financial situation that can result in debt accumulation.
Impact on APS
- When APS is negative, it indicates that individuals are not only saving nothing from their income but also borrowing or using savings to finance consumption.
- Negative APS can lead to a cycle of increasing debt, as individuals continue to spend more than they earn.
- This can have long-term financial implications, such as reduced future consumption, decreased ability to invest, and financial instability.
Significance of APS
- APS is an important economic indicator that reflects the saving behavior of individuals and households.
- A negative APS suggests that individuals are not preparing for future needs or emergencies, which can have negative consequences on their financial well-being.
- Monitoring APS can help policymakers understand the savings habits of the population and implement measures to promote saving and financial stability.
In conclusion, a negative APS indicates that consumption expenditure is surpassing income, leading to unsustainable financial behavior. It is essential for individuals to maintain a positive APS to ensure financial security and stability in the long run.
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The value of APS can be negative whena)The value of consumption expenditure becomes higher than income.b)The value of consumption is equal to the value of incomec)The value of consumption is less than the value of incomed)The value of consumption does not exceed the value of incomeCorrect answer is option 'A'. Can you explain this answer?
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The value of APS can be negative whena)The value of consumption expenditure becomes higher than income.b)The value of consumption is equal to the value of incomec)The value of consumption is less than the value of incomed)The value of consumption does not exceed the value of incomeCorrect answer is option 'A'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about The value of APS can be negative whena)The value of consumption expenditure becomes higher than income.b)The value of consumption is equal to the value of incomec)The value of consumption is less than the value of incomed)The value of consumption does not exceed the value of incomeCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The value of APS can be negative whena)The value of consumption expenditure becomes higher than income.b)The value of consumption is equal to the value of incomec)The value of consumption is less than the value of incomed)The value of consumption does not exceed the value of incomeCorrect answer is option 'A'. Can you explain this answer?.
The value of APS can be negative whena)The value of consumption expenditure becomes higher than income.b)The value of consumption is equal to the value of incomec)The value of consumption is less than the value of incomed)The value of consumption does not exceed the value of incomeCorrect answer is option 'A'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about The value of APS can be negative whena)The value of consumption expenditure becomes higher than income.b)The value of consumption is equal to the value of incomec)The value of consumption is less than the value of incomed)The value of consumption does not exceed the value of incomeCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The value of APS can be negative whena)The value of consumption expenditure becomes higher than income.b)The value of consumption is equal to the value of incomec)The value of consumption is less than the value of incomed)The value of consumption does not exceed the value of incomeCorrect answer is option 'A'. Can you explain this answer?.
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