Question

What does \[APC=\frac{C}{Y}\] measure?

Options

• Consumption that takes place even when income is zero.

• The change in consumption due to a unit change in income.

• The ratio of total saving to total income at a given level of income.

• The ratio of total consumption to total income at a given level of income.

Answer 1

APC is Average Propensity to Consume. It measures average spending relative to income by dividing total consumption by total income.