- Average propensity to consume
Average propensity to consume (APC) is the percentage of income spent. To find the percentage of
incomespent, one needs to divide consumption by income, or. In an economy in which each individual consumer saves lots of money, there is a tendency of people losing their jobs because demand for goods and services will be low. Thus saving as a leakage is an advantage from the savers' point of view, while for the economy as a whole it is a considerable disadvantage.
disposable incomeis used as the denominator instead, so. ::: Where C is the amount spent, Y is pre-tax income, and T is taxes
The inverse is the
average propensity to save(APS).
Average propensity to consume (APC) is the percentage of income people desire to spent.
It is key to note that Average Propensity to Consume (APC) is very different from Marginal Propensity to Consume (MPC). These two values are often confused in economics.
Marginal propensity to save
Marginal propensity to consume
Wikimedia Foundation. 2010.
Look at other dictionaries:
Average Propensity To Consume — The average propensity to consume (APC) refers to the percentage of income that is spent on goods and services rather than on savings. One can determine the percentage of income spent by dividing the average household consumption (what is spent)… … Investment dictionary
propensity to consume — ▪ economics in economics, the proportion of total income or of an increase in income that consumers tend to spend on goods and services rather than to save. The ratio of total consumption to total income is known as the average propensity… … Universalium
Average propensity to save — The average propensity to save (APS), also known as the savings ratio, is an economics term that refers to the proportion of income which is saved, usually expressed for household savings as a percentage of total household disposable income. The… … Wikipedia
Marginal propensity to consume — In economics, the marginal propensity to consume (MPC) is an empirical metric that quantifies induced consumption, the concept that the increase in personal consumer spending (consumption) occurs with an increase in disposable income (income… … Wikipedia
propensity to save — ▪ economics in economics, the proportion of total income or of an increase in income that consumers save rather than spend on goods and services. The average propensity to save equals the ratio of total saving to total income; the marginal… … Universalium
Marginal propensity to save — The marginal propensity to save (MPS) refers to the increase in saving (non purchase of current goods and services) that results from an increase in income i.e. The marginal propensity to save might be defined as the proportion of each additional … Wikipedia
Progressive tax — A progressive tax is a tax imposed so that the tax rate increases as the amount subject to taxation increases. [ [http://www.merriam webster.com/dictionary/Progressive Webster] (4b): increasing in rate as the base increases (a progressive tax)] [ … Wikipedia
Life-cycle Income Hypothesis — Italian American Economist Franco Modigliani, winner of Nobel Memorial Prize in Economics in 1985, originated the Life cycle Income Hypothesis base on Irving Fisher s model of inter temporal choice. In Modigliani s Life cycle Hypothesis, or LCH… … Wikipedia
Life-Cycle Hypothesis (LCH) — The Life Cycle Hypothesis (LCH) is an economic theory that pertains to the spending and saving habits of people over the course of a lifetime. The concept was developed by Franco Modigliani and his student Richard Brumberg. LCH presumes that… … Investment dictionary
Permanent income hypothesis — The permanent income hypothesis (PIH) is a theory of consumption that was developed by the American economist Milton Friedman. In its simplest form, PIH states that the choices made by consumers regarding their consumption patterns are determined … Wikipedia