Answer :
No, neither MPS or MPC can ever be negative. Because MPS is the ratio between additional saving (∆S ) and additional income(∆Y). Likewise, MPC is the ratio between additional consumption (∆C) and additional income (∆Y). The ratio ∆S / ∆Y refers to slope of Saving function which is always positive because of positive relationship between S and Y. Likewise, the ratio ∆C / ∆Y refers to slope of consumption function which is always positive because of positive relationship between C and Y.
Also read :
No comments:
Post a Comment