Giving reasons, state whether the following statements are true or false:
- When marginal propensity to consume is zero, the value of investment multiplier will also be zero.
- Value of average propensity to save can never be less than zero.
CBSE OUTSIDE DELHI - SET 1 2010
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False: When MPC = 0, Multiplier $=\frac{1}{1-\text{MPC}}=\frac{1}{1-0}=1.$
False: APS or S/Y can be negative when S is negative At low level of income consumption expenditure is more than income.
False: APS or S/Y can be negative when S is negative At low level of income consumption expenditure is more than income.
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