If APS in an economy is 0.6, what will be the value of APC?

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Solution

Average propensity to consume (APC) is the ratio of consumption expenditure (C) and income (Y), which indicates the average percentage of income that is spent on consumption. It can be algebraically expressed as:
$A P C = \frac{C}{Y}$ .

Average propensity to save (APS) is the ratio of saving (S) and income(Y), expressing the average percentage of income that is saved. It is algebraically written as:
$A P S = \frac{S}{Y}$ .
$A P C + A P S$
$= \frac{C}{Y} + \frac{S}{Y}$
$= \frac{C + S}{Y}$
$= \frac{Y}{Y}$
= 1

$A P C + A P S = 1$
$A P C = 1 - A P S = 1 - 0.6 = 0.4$

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