Question

If the value of APS is 0.2 &national income is 4000 crore,then consumption will be answer please

Answer 1

The consumption will be 0.2

Explanation:

• Consumption is the function which states the relationship among the present disposable income and the current consumption.

• The function of consumption of this kind states that the individuals divide the income among the saving and consumption.

• So, the formula of APS (Average Propensity to save) is as:

APS = Savings / Income

where

APS is 0.2

Income is 4,000 cr

Putting the values above:

Savings = APS × Income

Savings = 0.2 × 4,000 cr

Savings = 800 cr

• The formula for computing the Consumption is as:

Consumption = Saving / Income

Consumption = 800 cr / 4,000 cr

Consumption = 0.2