When the average propensity to save (APS) is 0.25, then this means
A) people are spending 25 percent of their disposable income.
B) people are spending 75 percent of their disposable income.
C) people are saving $0.25 of the last dollar earned.
D) people are spending 40 percent of their disposable income and investing the remaining 60 percent.

Question

Quizplus · Accepted Answer

The average propensity to save (APS) is the fraction of total income that is saved rather than spent. If APS is 0.25, this means 25 percent of disposable income is saved, implying that the remaining 75 percent is spent.

When the Average Propensity to Save (APS) Is 0