What do you mean by Savings? Define Average Propensity to Save and Mar

1.	What do you mean by Savings? Define Average Propensity to Save and Marginal Propensity to Save.
Answer» Saving is the difference between income and consumption. In the words of Keynes, “Saving is the excess of income overconsumption.” In other words, Saving = Income – Consumption Average Propensity to Save (A.P.S.): A.P.S. is the ratio of saving to income. In other words, A.P.C = \(\frac{Saving }{ Income }\) Marginal Propensity to Save (M.P.S.): M.P.S. is defined as the ratio of change in saving to change in income. In other words, M.P.S = \(\frac{Change\, in \,Saving }{ Change \,in\, Income}\) or \(\frac{ΔS}{ΔY}\)

What do you mean by Savings? Define Average Propensity to Save and Marginal Propensity to Save.

Answer»

Saving is the difference between income and consumption. In the words of Keynes, “Saving is the excess of income overconsumption.” In other words,

Saving = Income – Consumption
Average Propensity to Save (A.P.S.): A.P.S. is the ratio of saving to income. In other words,

A.P.C = \(\frac{Saving }{ Income }\)

Marginal Propensity to Save (M.P.S.): M.P.S. is defined as the ratio of change in saving to change in income. In other words,

M.P.S = \(\frac{Change\, in \,Saving }{ Change \,in\, Income}\) or \(\frac{ΔS}{ΔY}\)