Which one of the following statements is CORRECT in the context of the Keynesian Absolute Income Hypothesis? (A) The marginal propensity to consume increases as the income increases. (B) The average propensity to consume increases as the income increases. (C) The average propensity to save decreases as the income increases. (D) The average propensity to consume approaches the marginal propensity to consume as the income increases.

IIT JAM 2026 Question 22: Consumption and investment

Which one of the following statements is CORRECT in the context of the Keynesian Absolute Income Hypothesis?

Tap an option to check your answer.

Checking your account…

Consumption and investment has come up 74 times in 7 exams since 2005.

This question is on The Keynesian consumption function, part of Consumption and investment in Macroeconomics.

Consumption as a function of current income: the propensities to consume and save.

TestStop has 17 past-paper questions on this subtopic; the nearest in year are below.