Question

Empirical evidence finds that the average propensity to consume is falling:

A. for neither the short-run nor the long-run consumption.
B. for only the long-run.
C. for both the short-run and the long-run.
D. for only the short-run.

Answer 1

D. for only the short-run.

Answer 2

The correct option is D

Step-by-step explanation:

Empirical evidence is the evidence which is defined as the information received through the senses, specifically by documentation as well as monitoring of patterns and behavior via experimentation.

APC stands for Average Propensity to Consume is the one which measures the percentage of income spent instead of savings. And it is evaluated by dividing the average household consumption by average household income.

So, if the empirical evidence states that the APC is falling or decreasing then it is only for short- run or short- period.