average propensity to consume

In economics, the average propensity to consume (APC) is the proportion of total income that consumers spend on goods and services. It is calculated as total consumption divided by total income. This concept is closely related to the marginal propensity to consume (MPC), which measures how much of an increase in income is spent.

Households divide their income between consumption and saving, so the APC plus the average propensity to save always equals one. Low-income families typically have a higher APC than high-income families, sometimes even exceeding one if they must go into debt for necessities. The MPC is often considered more significant as it influences the multiplier effect, determining how initial changes in spending impact national income.1