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 | $\text{APS}=\frac{\text{S}}{\text{Y}}$ |
APS can be negative. When at low level of income consumption exceeds income, savings are negative and make the APS negative. It can be explained with the help of the following schedule.
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