Keynes Postulated That the Marginal Propensity to Consume $\left( \mathrm { MPC } = \frac { \Delta C } { \Delta Y _ { p d } } \right)$

question 14

Essay

Keynes postulated that the marginal propensity to consume $\left( \mathrm { MPC } = \frac { \Delta C } { \Delta Y _ { p d } } \right)$ is between zero and one. He also hypothesized that the average propensity to consume (APC $= \frac { C } { Y _ { p d } }$ ) would fall as personal disposable income $Y _ { p d }$ increased. (a)Specify a linear consumption function.Show that the assumption of a falling APC
implies the presence of a positive intercept.

---

Definitions:

Notice

Formal information or warning given to a person or public about an event, decision, or action.

Assignment Valid

Refers to the legal transfer of one party's rights and benefits under a contract to another party, recognized as legitimate and binding.

Delegable

Capable of being assigned or entrusted to another person or party, particularly in the context of duties or authority.

Contractual Duty

An obligation imposed by a contract that requires a party to act or refrain from acting in a certain manner.