Which of the following is a feature of the Keynesian consumption function?
A. Consumption is a function of current disposable income
B. Consumption depends only on the rate of interest
C. Average propensity to consume rises with income
D. Consumption is independent of income
Answer: Option A
Solution (By JKSSB Mock Tests)
The simple Keynesian consumption function states that current consumption depends primarily on current disposable income, with a positive marginal propensity to consume less than one.
Explanation:
Say's Law of Markets, associated with classical economics, states that 'supply creates its own demand', implying that general overproduction is impossible.
No comments yet. Be the first to start the discussion!