1. Prepare a comparative table of the following concepts: a. Average Propensity to Consume b. Average...
1. Prepare a comparative table of the following concepts:
a. Average Propensity to Consume
b. Average propensity to save
Homework Answers
APC:
1.) APC = consumption divided by income = C / Y
APC is slope of consumption function
APC can be greater than one , equal to one or less than one.
APC is always positive , can't be negative
APC falls as income rises.
APS:
1.) APS = saving / income = S/Y
S = Y-C , so APS = 1- APC, or APC + APS= 1
APS is slope of saving function
APS can't be greater than one or equal to one., It's always less than one
APS can be negative
APS rises with rise in income.
As APS rises, APC falls
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