Question

Can APS ever be negative? If yes, give an example to support your answer.

Answer 1

Yes, APS can be negative in a situation where S is negative (or when C > Y). This implies that the consumption is greater than the income.

Example: $\text{Y=50, C = 60, S = -10}$

$\text{APS}=\frac{\text{S}}{\text{Y}}=\frac{-10}{50}=-0.2$