Answer :

Final answer:

The correct equation is APS + MPC = 1. These terms represent propensities to save and consume respectively. As all income must be either saved or spent, these two proportions add up to 1.

Explanation:

The correct answer to this question is b. APS + MPC = 1.

In economics, each of these acronyms represents a specific concept related to consumer behavior and spending: APS stands for Average Propensity to Save, which is the percentage of total income that an individual or an economy saves. MPC stands for Marginal Propensity to Consume, which is the increase in consumer spending due to an increase in income.

To understand why APS + MPC equals 1, consider that an individual's income can only be allocated in two ways: for spending (consumption) or saving. Therefore, the sum of the percentage of income spent (MPC) and the percentage of income saved (APS) must equal 100%, or 1 when expressed as a decimal.

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Answer:

Option d is correct.

Explanation:

We know that,

Income (Y) = Consumption (C) + Savings (S)

In can be written as

[tex]Y=C+S[/tex]

Dividing both sides by Y, we get

[tex]\dfrac{Y}{Y}=\dfrac{C+S}{Y}[/tex]

[tex]1=\dfrac{C}{Y}+\dfrac{S}{Y}[/tex]

[tex]1=APC+APS[/tex] [tex][\because APC=\dfrac{C}{Y}\text{ and }APS=\dfrac{S}{Y}][/tex]

Since APC+APS=1, therefore the correct option is d.