Question

Explain the relationship between:
APC and APS


MPC and MPS
​

Answer 1

Answer:

As the income is either consumed or saved, the sum of APC and APS is supposed to be equal to 1. Thus, the higher the APC, the lower will be the APS and vice versa

The marginal propensity to save (MPS) is the portion of each extra dollar of a household's income that's saved. MPC is the portion of each extra dollar of a household's income that is consumed or spent. Consumer behavior concerning saving or spending has a very significant impact on the economy as a whole