Average propensity to consume

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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, or APC=\frac{C}{Y}.

Sometimes, disposable income is used as the denominator instead, so APC=\frac{C}{Y-T},

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 spend.

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.

See also[edit]