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A1 In Canada, as well as other countries, the average propensity to consume (the ratio of consumption to disposable income) has been fairly constant over time, while cross-sectional information shows that richer households tend to save more as their income rise. These phenomena cannot be explained with our available models.

True;False or Uncertain

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Answer #1

Richer Households tend to save more as their income expands, indicates that the fraction of income spent on consumption has reduced, i.e. the marginal propensity to consumer decreases as incomes rise. This is in line with the Engel's Law
APC remaining constant may indicate that the people's incomes may not have risen appreciably with respect to their consumption.

Hence, False according to me.

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