The average propensity to consume refers to:
A)the dollars of income spent on luxury goods.
B)the dollars of income saved by an individual.
C)expenditures on the basic necessities of life.
D)the percentage of income spent for current consumption.
E)the fact that people with higher propensity to consume earn lower income.

Question

Quizplus · Accepted Answer

The average propensity to consume is defined as the percentage of income that an individual or population spends on goods and services as opposed to saving. This concept is crucial in understanding consumer behavior and the overall economic activity.

The Average Propensity to Consume Refers To