What Is the Average Propensity to Save?

In macroeconomics, average savings propensity APS (Average Propensity to Save) is the proportion of savings in unit income.

Average saving propensity

Explanation in reference book

People in a certain period

use

Mean saving propensity means the ratio of saving to income at each income level. For example, a person's disposable income is $ 10,000 a month, and $ 4,000 of his savings are distributed in proportion to each month in turn, and his average saving tendency for the year is 0.4.

Changes in average saving propensity and average consumption propensity

1. The average saving propensity will rise with the increase of income,

2. The average propensity to consume will decrease as income increases.

Engel's Law: Poor households spend the majority of their income on food expenditures, and as income increases, the proportion of food expenditures decreases.

The rich save much more than the poor, not only in absolute terms, but also in relative amounts.

3. APC and APS complement each other.