What do you mean by Consumption? Define Average Propensity to Consume and Marginal Propensity to Consume.
Answers
Answer:
Economic liberalisation, begun in 1991, has caused India to become a fast growing major economy and a newly industrialised country. Its gross domestic product ranks sixth in the world in market exchange rates and third in purchasing power parity. Its per capita income ranks 133rd and 116th in the two measures. India faces challenges of poverty, corruption, malnutrition inadequate public healthcare. A nuclear weapons state and regional power, it has the second largest active military in the world and ranks high in military expenditure. India is a secular, federal republic, governed in a democratic parliamentary system, and administered in 29 states and seven union territories. A pluralistic, multilingual and multi-ethnic society, India is home to 1.3 billion people. It is also home to a high diversity of wildlife in a variety of protected habitats.
Explanation:
Consumption means using, buying, or eating something; however, in economics, it refers to the use of goods and services by households.
Marginal Propensity to Consume (MPC) is a term used in economics used to refer to the metric which is applied to quantify induced consumption by an individual. It is based on the concept that an increase in disposal income increases personal consumer spending (consumption/ expenditure) after taxes are removed.
Average Prosperity to Consume (APC), on the other hand, refers to the portion of income spend, more often referred to as disposable income; thus, it is computed by an individual dividing his/her consumption by income received.