Economics · Consumption Theories
Consider the following statements about the Keynesian Absolute Income Hypothesis (AIH): I. APC is always greater than MPC in the Keynesian consumption function C = C̄ + cYd. II. The consumption function is concave, implying MPC decreases as income rises. III. Keynes' AIH was based on empirical long-run time-series data collected by Simon Kuznets. IV. When income is zero, consumption is positive and is financed by borrowings or dissaving. Which of the above statements are CORRECT?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1I, II, III and IV
- 2I and IV only✓
- 3II and IV only
- 4I and III only
Correct answer
I and IV only
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