Average Propensity to Consume

Average propensity to consume (APC) may be defined as the ratio of total consumption spending to total disposable income. It can be computed for an individual household or for the economy as a whole.

Symbolically,
    

where, C = total consumption spending, and
                    
Y = total disposable income (i.e., income minus taxes).

For example, if at a given time the level of disposable income in an economy is $ 10,000 crores and consumption expenditure is $ 8,000 crores, the APC for the economy will be calculated as follows:
    

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