Question

differentiate between APS and MPS​

Answer 1

Answer:

Simply put, total saving (S) divided by total income (Y) is called APS (APS = S/Y) whereas change in savings (∆S) divided by change in income (∆Y) is called MPS (MPS = ∆S/∆Y). ... Between APS and MPS, the value of APS can be negative when consumption expenditure becomes higher than income.

Answer 2

APS stands for Average Propensity to save and MPS stands for Marginal Propensity to Save.

• APS is saving divided by income and MPS is change in saving divided by change in income.
• APS value can be negative when consumption becomes higher than income.
• MPS can never be negative it can be zero or one.
• APS rises with the increase in income.
• If the entire income is saved then the MPS is one.
• APS = $\frac{Saving }{Income }$
• MPS =  $\frac{Change in saving}{Change in income }$