Differentiate between APC and APS and tell which of them is negative.
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| S. No |
Average Propensity to Consume (APC)
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Basis
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Average Propensity to Save (APS)
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| 1. |
It is the ratio of consumption expenditure (C) to the corresponding level of income (Y) at a point of time.
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Meaning
|
It refers to the ratio of savings (S) to the corresponding level of income (Y) at a point of time.
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| 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
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APS can be less than zero when there are dis-savings, i.e., till consumption is more than national income.
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| 3. |
$\text{APC}=\frac{\text{C}}{\text{Y}}$
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Formula
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$\text{APS}=\frac{\text{S}}{\text{Y}}$
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