Question

What is the relationship between APC and APS?

Answer 1

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:
$APC=\frac{C}{Y}$.

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:
$APS=\frac{S}{Y}$.

As the income is either consumed or saved, the sum of APC and APS is supposed to be equal to 1. Thus, the higher the APC, the lower will be the APS and vice versa.