Question

If distribution of income is more equal, then the propensity to consumer of the country is
(a) Relatively High
(b) Relatively Low
(c) Unaffected
(d) None of the above

Answer 1

Answer:

The correct option is Relatively low

Explanation:

Propensity show the relationship between two variable.

Propensity of consumption show the relation between income and consumption, it show the change in consumption due to change in income

If the distribution of income is more, then the people start consumption but not with the same proportion as income increase. People starts more saving as compared to consumption if income goes consecutively high.

It show the propensity to consumption is relatively low if distribution of income is more.

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