Average Propensity To Consume
- 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) by the average household income (what is earned). The inverse of the average propensity to consume is the average propensity to save (APS).
Economic periods where consumers are spending can boost the economy: more goods are purchased (high demand for goods and services); keeping more people employed and more businesses open. Periods where the tendency to save is increased can have a negative effect on the economy as people purchase fewer goods and services (low demand for goods and services), resulting in fewer jobs and increased business closures.
Investment dictionary.
Academic.
2012.
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Average propensity to consume — (APC) is the percentage of income spent. To find the percentage of income spent, one needs to divide consumption by income, orAPC=frac{C}{Y}. In an economy in which each individual consumer saves lots of money, there is a tendency of people… … Wikipedia
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
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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
