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

Question

Quizplus · Accepted Answer

The average propensity to consume (APC) represents the percentage of a person's income that is spent on current consumption. It is calculated by dividing total consumption by total income. For example, if a person earns $2,000 and spends $1,500 on goods and services, their APC would be 0.75 or 75%. This means they are spending 75% of their income on consumption.

The Average Propensity to Consume Refers to The