Question
Differentiate between APC and APS and tell which of them is negative.
| S. No |
Average Propensity to Consume (APC)
|
Basis
|
Average Propensity to Save (APS)
|
| 1. |
It is the ratio of consumption expenditure (C) to the corresponding level of income (Y) at a point of time.
|
Meaning
|
It refers to the ratio of savings (S) to the corresponding level of income (Y) at a point of time.
|
| 2. |
APC can never be less than zero because even at zero level of income, we have consumption i.e., autonomous consumption.
|
Value less than zero
|
APS can be less than zero when there are dis-savings, i.e., till consumption is more than national income.
|
| 3. |
$\text{APC}=\frac{\text{C}}{\text{Y}}$
|
Formula
|
$\text{APS}=\frac{\text{S}}{\text{Y}}$
|
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|
S.No.
|
Contents
|
₹ (in crore)
|
| $(i)$ |
Net Domestic Capital Formation
|
$500$ |
| $(ii) $ |
Compensation of Employees
|
$1,850$ |
| $(iii)$ |
Consumption of Fixed Capital
|
$100$ |
| $(iv)$ |
Government Final Consumption Expenditure
|
$1,100$ |
| $(v)$ |
Private Final Consumption Expenditure
|
$2,600$ |
| $(vi)$ |
Rent
|
$400$ |
| $(vii)$ |
Dividend
|
$200$ |
| $(viii)$ |
Interest
|
$500$ |
| $(ix)$ |
Net Exports
|
$(-)100$ |
| $(x)$ |
Profit
|
$1,100$ |
| $(xi)$ |
Net Factor Income from Abroad
|
$(-)50$ |
| $(xii)$ |
Net Indirect Taxes
|
$250$ |
|
S. No.
|
|
(in crores)
|
|
(i)
|
Value of output in the economic territory.
|
4,100
|
|
(ii)
|
Net imports.
|
(-)50
|
|
(iii)
|
Intermediate purchases by the primary sector.
|
600
|
|
(iv)
|
Private final consumption expenditure.
|
1,450
|
|
(v)
|
Intermediate purchases by the secondary sector.
|
700
|
|
(vi)
|
Government final consumption expenditure.
|
400
|
|
(vii)
|
Net domestic fixed capital formation.
|
200
|
|
(viii)
|
Intermediate purchases by the tertiary sector.
|
700
|
|
(ix)
|
Net change in stocks.
|
(-)50
|
|
(x)
|
direct taxes.
|
100
|
|
(xi)
|
Consumption of fixed capital.
|
50
|