Aggregate desired consumption divided by aggregate disposable income is called the
A)average propensity to spend.
B)average propensity to save.
C)marginal propensity to save.
D)average propensity to consume.
E)total propensity to save.

Question

Quizplus · Accepted Answer

The aggregate desired consumption divided by aggregate disposable income is called the average propensity to consume (APC), which measures the percentage of income that households plan to spend on goods and services. It is also worth noting that the average propensity to save (APS) is simply the difference between 1 and the APC, as disposable income is either spent or saved. The marginal propensity to save (MPS) is the change in saving caused by a marginal change in disposable income. The total propensity to save is not a commonly used economic term.

Aggregate Desired Consumption Divided by Aggregate Disposable Income Is Called