Average Propensity to consume (APC):

“The ratio of total consumption to total disposable income of economy is known as average propensity to consume.” The amount of APC represents that how much part of income is consumed by the consumers of economy.

APC = C/Y 

Here , APC = Average Propensity to Consume

C = Total Consumption

Y = Total Income

Average Propensity to Save (APS) :

It means the ratio of Total Saving to Total Income. In other words when we divide Savings by Income , we get Average Propensity to Save.

APC = S/Y

Here , APS = Average Propensity to save

C = Total Consumption

Y = Total Income

Relationship between APC and APS

The sum of the average Propensity to Consume (APC) and Average Propensity to save (APS) is always equal to unity. i.e., APC + APS = 1. It is so because the money income can either be spent on consumption or it can be saved. In case, we consider the ratio of consumption to money income, we call it average propensity to consume, (APC), and the ratio of saving to income represents average propensity to save (APS). It is for his reason that the sum of APC and APS equals unity. Symbolically,

APC = C/Y and APS = S/Y

We know that Y = C + S

APC = APS = C/Y + S/Y = C+S/Y = Y/Y = 1

Here APC + APS = 1