Commerce Exam > Commerce Questions > In S= -a+ (1-b) Y, -a representsa)The amount ...
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In S= -a+ (1-b) Y, -a represents
a)The amount of dissavings
done when there is high level of income.
b)The amount of savings done when there is zero level of income.
c)The amount of dissavings done when there is zero level of income.
d)The amount of savings done when there is high level of income.
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
In S= -a+ (1-b) Y, -a representsa)The amount of dissavingsdone when th...
Explanation:
The given equation is: S= -a (1-b) Y
Here, S represents savings and Y represents income.
The term -a (1-b) represents the relationship between savings and income.
The correct answer is option 'B', which states that -a represents the amount of dissavings done when there is zero level of income.
To understand this, we need to look at the equation in detail:
- The term 'a' represents the marginal propensity to consume (MPC), which is the fraction of additional income that is spent on consumption. So, if MPC is high, it means that people tend to spend more and save less when their income increases.
- The term '(1-b)' represents the marginal propensity to save (MPS), which is the fraction of additional income that is saved. So, if MPS is high, it means that people tend to save more and spend less when their income increases.
- When Y is zero, the entire equation becomes S=0, which means that there is no savings or dissavings.
- However, when Y is negative (i.e. when there is no income or negative income), the term -a (1-b) becomes positive, which means that there is dissavings. This is because people tend to borrow or use their savings to maintain their consumption level when they have no income or negative income.
- Therefore, the correct answer is option 'B', which states that -a represents the amount of dissavings done when there is zero level of income.
The given equation is: S= -a (1-b) Y
Here, S represents savings and Y represents income.
The term -a (1-b) represents the relationship between savings and income.
The correct answer is option 'B', which states that -a represents the amount of dissavings done when there is zero level of income.
To understand this, we need to look at the equation in detail:
- The term 'a' represents the marginal propensity to consume (MPC), which is the fraction of additional income that is spent on consumption. So, if MPC is high, it means that people tend to spend more and save less when their income increases.
- The term '(1-b)' represents the marginal propensity to save (MPS), which is the fraction of additional income that is saved. So, if MPS is high, it means that people tend to save more and spend less when their income increases.
- When Y is zero, the entire equation becomes S=0, which means that there is no savings or dissavings.
- However, when Y is negative (i.e. when there is no income or negative income), the term -a (1-b) becomes positive, which means that there is dissavings. This is because people tend to borrow or use their savings to maintain their consumption level when they have no income or negative income.
- Therefore, the correct answer is option 'B', which states that -a represents the amount of dissavings done when there is zero level of income.
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In S= -a+ (1-b) Y, -a representsa)The amount of dissavingsdone when th...
Yes b is correct as -a is negative autonomous consumption which is at 0 level of income as savings equal to income minus consumption so
say for example autonomous consumption is 5 at 0 level of income then savings will be -5 so it's dissavings only
say for example autonomous consumption is 5 at 0 level of income then savings will be -5 so it's dissavings only
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In S= -a+ (1-b) Y, -a representsa)The amount of dissavingsdone when there is high level of income.b)The amount of savings done when there is zero level of income.c)The amount of dissavings done when there is zero level of income.d)The amount of savings done when there is high level of income.Correct answer is option 'C'. Can you explain this answer?
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In S= -a+ (1-b) Y, -a representsa)The amount of dissavingsdone when there is high level of income.b)The amount of savings done when there is zero level of income.c)The amount of dissavings done when there is zero level of income.d)The amount of savings done when there is high level of income.Correct answer is option 'C'. Can you explain this answer? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about In S= -a+ (1-b) Y, -a representsa)The amount of dissavingsdone when there is high level of income.b)The amount of savings done when there is zero level of income.c)The amount of dissavings done when there is zero level of income.d)The amount of savings done when there is high level of income.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for In S= -a+ (1-b) Y, -a representsa)The amount of dissavingsdone when there is high level of income.b)The amount of savings done when there is zero level of income.c)The amount of dissavings done when there is zero level of income.d)The amount of savings done when there is high level of income.Correct answer is option 'C'. Can you explain this answer?.
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