How Do Economists Define the Average Propensity to Consume (APC)

question 120

Multiple Choice

How do economists define the average propensity to consume (APC) ?

• A)as the proportion of any change in disposable income that becomes a change in consumption
• B)as the proportion of any change in disposable income that does not become a change in consumption
• C)as the fraction of total disposable income that households do not spend on consumption
• D)as the fraction of total disposable income that households spend on consumption

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Definitions:

Income Effect

The alteration in the income of a person or an economy and its impact on the demand for a particular good or service.

Leisure

The time available for ease and relaxation where no work is done, often considered as time spent away from business, work, job hunting, domestic chores, and education.

Workers' Incomes

The financial compensation received by employees for their labor, including wages, salaries, and bonuses.

Labor Supplied

The total hours of work that workers are willing to offer at a given wage rate.