APC is equal to
A)The change in total consumption divided by the change in total disposable income.
B)The change in total saving divided by the change in total disposable income.
C)Total consumption divided by total disposable income.
D)Total saving divided by total disposable income.

Question

Quizplus · Accepted Answer

APC (Average Propensity to Consume) is defined as total consumption divided by total disposable income. It represents the proportion of income that is spent on consumption. Choice A and B are incorrect because they are referring to the marginal propensity to consume (MPC) and the marginal propensity to save (MPS) respectively, which measure the change in consumption/saving in response to a change in income. Choice D is incorrect as it refers to the total saving rate, which is different from APC.

APC Is Equal to