Commerce Exam > Commerce Questions > MPS= 1+MPC. It isa)Depends on their valuesb)T...
Start Learning for Free
MPS= 1+MPC. It is
- a)Depends on their values
- b)TRUE
- c)False
- d)None of these
Correct answer is option 'C'. Can you explain this answer?
| FREE This question is part of | Download PDF Attempt this Test |
Verified Answer
MPS= 1+MPC. It isa)Depends on their valuesb)TRUEc)Falsed)None of these...
MPS is measured as ratio of change in savings to change in income, its value lies between 0 and 1. Also, marginal propensity to save is opposite of marginal propensity to consume. Mathematically, in a closed economy, MPS + MPC = 1, since an increase in one unit of income will be either consumed or saved.
View all questions of this test
Most Upvoted Answer
MPS= 1+MPC. It isa)Depends on their valuesb)TRUEc)Falsed)None of these...
Overview:
The question asks whether the statement "MPS = 1 - MPC" is true or false. MPS stands for Marginal Propensity to Save, and MPC stands for Marginal Propensity to Consume. Both MPS and MPC measure the change in saving and consumption, respectively, when there is a change in income.
Explanation:
To determine the correctness of the statement, let's first understand the concepts of MPS and MPC:
1. MPS (Marginal Propensity to Save):
- MPS refers to the proportion of any change in income that individuals choose to save.
- It indicates the change in saving when there is a change in income.
- MPS can range from 0 to 1, representing the percentage of additional income that is saved rather than consumed.
2. MPC (Marginal Propensity to Consume):
- MPC refers to the proportion of any change in income that individuals choose to consume.
- It indicates the change in consumption when there is a change in income.
- MPC can also range from 0 to 1, representing the percentage of additional income that is consumed rather than saved.
Analysis of the Statement:
The statement "MPS = 1 - MPC" implies that the Marginal Propensity to Save (MPS) is equal to 1 minus the Marginal Propensity to Consume (MPC). Let's assess the accuracy of this statement:
If MPS = 1 - MPC:
- If the value of MPS is zero, then the value of MPC should be 1 (1 - 1 = 0).
- If the value of MPS is 0.5, then the value of MPC should be 0.5 (1 - 0.5 = 0.5).
- If the value of MPS is 1, then the value of MPC should be 0 (1 - 0 = 1).
Conclusion:
From the analysis, we can see that the statement "MPS = 1 - MPC" is incorrect. The values of MPS and MPC are independent of each other and can vary between 0 and 1. Therefore, the correct answer to the question is option C: False.
The question asks whether the statement "MPS = 1 - MPC" is true or false. MPS stands for Marginal Propensity to Save, and MPC stands for Marginal Propensity to Consume. Both MPS and MPC measure the change in saving and consumption, respectively, when there is a change in income.
Explanation:
To determine the correctness of the statement, let's first understand the concepts of MPS and MPC:
1. MPS (Marginal Propensity to Save):
- MPS refers to the proportion of any change in income that individuals choose to save.
- It indicates the change in saving when there is a change in income.
- MPS can range from 0 to 1, representing the percentage of additional income that is saved rather than consumed.
2. MPC (Marginal Propensity to Consume):
- MPC refers to the proportion of any change in income that individuals choose to consume.
- It indicates the change in consumption when there is a change in income.
- MPC can also range from 0 to 1, representing the percentage of additional income that is consumed rather than saved.
Analysis of the Statement:
The statement "MPS = 1 - MPC" implies that the Marginal Propensity to Save (MPS) is equal to 1 minus the Marginal Propensity to Consume (MPC). Let's assess the accuracy of this statement:
If MPS = 1 - MPC:
- If the value of MPS is zero, then the value of MPC should be 1 (1 - 1 = 0).
- If the value of MPS is 0.5, then the value of MPC should be 0.5 (1 - 0.5 = 0.5).
- If the value of MPS is 1, then the value of MPC should be 0 (1 - 0 = 1).
Conclusion:
From the analysis, we can see that the statement "MPS = 1 - MPC" is incorrect. The values of MPS and MPC are independent of each other and can vary between 0 and 1. Therefore, the correct answer to the question is option C: False.
Free Test
FREE
| Start Free Test |
Community Answer
MPS= 1+MPC. It isa)Depends on their valuesb)TRUEc)Falsed)None of these...
MPS+ MPC=1
Only if MPC=0, then MPS=1
Attention Commerce Students!
To make sure you are not studying endlessly, EduRev has designed Commerce study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in Commerce.
|
Explore Courses for Commerce exam
|
|
Similar Commerce Doubts
Top Courses for CommerceView all
MPS= 1+MPC. It isa)Depends on their valuesb)TRUEc)Falsed)None of theseCorrect answer is option 'C'. Can you explain this answer?
Question Description
MPS= 1+MPC. It isa)Depends on their valuesb)TRUEc)Falsed)None of theseCorrect answer is option 'C'. 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 MPS= 1+MPC. It isa)Depends on their valuesb)TRUEc)Falsed)None of theseCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for MPS= 1+MPC. It isa)Depends on their valuesb)TRUEc)Falsed)None of theseCorrect answer is option 'C'. Can you explain this answer?.
MPS= 1+MPC. It isa)Depends on their valuesb)TRUEc)Falsed)None of theseCorrect answer is option 'C'. 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 MPS= 1+MPC. It isa)Depends on their valuesb)TRUEc)Falsed)None of theseCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for MPS= 1+MPC. It isa)Depends on their valuesb)TRUEc)Falsed)None of theseCorrect answer is option 'C'. Can you explain this answer?.
Solutions for MPS= 1+MPC. It isa)Depends on their valuesb)TRUEc)Falsed)None of theseCorrect answer is option 'C'. Can you explain this answer? in English & in Hindi are available as part of our courses for Commerce.
Download more important topics, notes, lectures and mock test series for Commerce Exam by signing up for free.
Here you can find the meaning of MPS= 1+MPC. It isa)Depends on their valuesb)TRUEc)Falsed)None of theseCorrect answer is option 'C'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
MPS= 1+MPC. It isa)Depends on their valuesb)TRUEc)Falsed)None of theseCorrect answer is option 'C'. Can you explain this answer?, a detailed solution for MPS= 1+MPC. It isa)Depends on their valuesb)TRUEc)Falsed)None of theseCorrect answer is option 'C'. Can you explain this answer? has been provided alongside types of MPS= 1+MPC. It isa)Depends on their valuesb)TRUEc)Falsed)None of theseCorrect answer is option 'C'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice MPS= 1+MPC. It isa)Depends on their valuesb)TRUEc)Falsed)None of theseCorrect answer is option 'C'. Can you explain this answer? tests, examples and also practice Commerce tests.
|
|
Explore Courses for Commerce exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup