Desired consumption divided by disposable income is called the
A)consumption function.
B)marginal propensity to consume.
C)average propensity to consume.
D)average propensity to save.
E)relative consumption ratio.

Question

Quizplus · Accepted Answer

The desired consumption divided by disposable income is known as the average propensity to consume (APC). It represents the proportion of disposable income that a consumer is willing to spend on goods and services on average. The consumption function refers to the relationship between consumption and disposable income over a period of time, while the marginal propensity to consume (MPC) refers to the change in consumption that results from a change in disposable income. The average propensity to save (APS) refers to the proportion of disposable income that a consumer saves on average. The relative consumption ratio is not a commonly used term in economics.

Desired Consumption Divided by Disposable Income Is Called the