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JAMB Economics 1987 Question 44

Question 44

National Income

Statistical information available in most West African countries suggests that

  1. A.the marginal propensity to save is high
  2. B.the marginal propensity to consume is high
  3. C.the consumption pattern is negative
  4. D.there exists perfect correlation between consumption and savings.
Show the answer and explanation

Answer: B (the marginal propensity to consume is high)

Explanation

Incomes are low in most West African countries, so people spend most of any extra income; the marginal propensity to consume is high.