average propensity to consume


Average Propensity to Consume

The amount of money a person spends as a percentage of total income. For example, if one makes $50,000 and spends $40,000, the average propensity to consume is 80%. Countries with a high average propensity to consume generally have a lower unemployment rate because the demand to buy things creates jobs. However, it may be more susceptible to recession as people save very little. It should not be confused with the marginal propensity to consume.

average propensity to consume (APC)

the fraction of a given level of NATIONAL INCOME that is spent on consumption:

Alternatively, consumption can be expressed as a proportion of DISPOSABLE INCOME. See CONSUMPTION EXPENDITURE, PROPENSITY TO CONSUME, MARGINAL PROPENSITY TO CONSUME.