[Solved] Over short period, when income rises, average propensity to consume usually -

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Q.	Over short period, when income rises, average propensity to consume usually -
A.	rises
B.	falls
C.	remains constant
D.	fluctuates
Answer» B. falls
Explanation: Keynes postulated that aggregate consumption is a function of aggregate current disposable income. The Keynesian consumption function is written as: C = a + eY a > 0, 0 < c < 1; where a is the intercept, a constant which measures consumption at a zero level of disposal income; c is the marginal propensity to consume (MPC); and Y is the disposal in-come. So asincome increases, average propensity to consume (APC = C/Y) falls.

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