Th2.2: Relationship Between Savings and Consumption Flashcards
1
Q
What are savings?
A
what is not spent out of income
2
Q
The same factors which affect consumption…
A
affect savings but the opposite way around
e.g increase in confidence - spend more, save less
3
Q
Define MPS
A
how much of an increase in income is saved
4
Q
Define APS
A
the average amount saved out of income
5
Q
MPS
A
marginal propensity to save
6
Q
APS
A
average propensity to save
7
Q
MPS formula
A
change in income
8
Q
APS formula
A
total income
