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Average Propensity to Consume and Save definitions

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  • Disposable Income
    Amount remaining after taxes, available for allocation between spending on goods and services or setting aside for future use.
  • Consumption
    Total spending by households on goods and services, representing one possible use of after-tax earnings.
  • Savings
    Portion of after-tax earnings not spent on goods and services, set aside for future needs or investment.
  • Average Propensity to Consume
    Ratio of total household spending to total after-tax earnings, indicating the share of income used for purchases.
  • Average Propensity to Save
    Ratio of total household savings to total after-tax earnings, showing the share of income not spent.
  • Marginal Propensity to Consume
    Fraction of each additional dollar of after-tax earnings that is spent on goods and services.
  • Marginal Propensity to Save
    Fraction of each additional dollar of after-tax earnings that is set aside rather than spent.
  • Total Amount
    Sum of all units, such as spending or savings, accumulated over a period, used in calculating average rates.
  • Rate of Consumption
    Proportion of after-tax earnings allocated to spending, often expressed as a percentage.
  • Rate of Savings
    Proportion of after-tax earnings allocated to setting aside funds, often expressed as a percentage.
  • Change in Consumption
    Increase in household spending resulting from an increase in after-tax earnings.
  • Change in Savings
    Increase in household funds set aside resulting from an increase in after-tax earnings.
  • Formula
    Mathematical expression used to calculate economic measures such as ratios of spending or savings to income.