Question

Which of the following is the Average propensity to save?

• A. It is the consumption per unit income.
• B. It is the savings per unit of income.
• C. It is the change in saving per unit change in income.
• D. It is the change in consumption per unit change in income

Answer 1

Answer:

B. It is the savings per unit of income.

APS is calculated by dividing total savings by income level. Usually, disposable (after-tax) income is used. For example, if the income level is 100 and total savings for that level is 30, then APS is 30/100 or 0.3. APS can never be 1 or greater than 1.