If the Keynesian consumption function is written asthen the average propensity to consume is:

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BlackTom AI · Accepted Answer

The provided question appears to have missing or garbled answer options, so I will first acknowledge the available information and then proceed with the standard Keynesian framework.

- The Keynesian consumption function is typically written as C = a + bY, where:
  - a is autonomous consumption (consumption when income Y is zero),
  - b is the marginal propensity to consume (MPC), representing the change in consumption with a one-unit change in income.

- The average propensity to consume (APC) is defined as APC = C / Y.
  - Substituting the functional form: APC = (a + bY) / Y = a/Y + b.
  - This expression shows two key properties:
    1) APC = a/Y + b, meaning APC is the sum of the autonomous component a/Y and the MPC b.
    2) As income Y increases, a/Y tends toward zero, so APC approaches b (the MPC) in the long run.

- If the exam item were asking for the expression of APC given C = a + bY, the correct form would be APC = a/Y + b. This captures the declining influence of autonomous consumption at higher incomes and the constant share of income consumed that MPC represents.

- Why potential alternative formulations (that you might see as incorrect options) would be wrong:
  - If an option claimed APC = b only, that would neglect the autonomous component a and its diminishing influence as Y rises, which is inaccurate for finite Y.
  - If an option claimed APC = a + b (a constant), that would misstate the dependency on Y, since APC explicitly depends on Y through a/Y and is not a constant unless a = 0.
  - If an option claimed APC = C (i.e., APC = C/Y = C), that would be dimensionally inconsistent and conceptually wrong, since APC is a ratio to Y, not equal to C itself.
  - If an option claimed APC decreases with Y without bound, that would contradict APC = a/Y + b, which tends upward toward b as Y grows.

- In summary, for the standard C = a + bY form, APC = a/Y + b, which correctly reflects the declining role of autonomous consumption with higher income and the persistent share determined by MPC.

If the Keynesian consumption function is written asthen the average propensity to consume is:

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