Average propensity to save,
Definition of Average propensity to save:
The average propensity to save (APS) is an economic term that refers to the proportion of income that is saved rather than spent on goods and services. Also known as the savings ratio, it is usually expressed as a percentage of total household disposable income (income minus taxes). The inverse of average propensity to save is the average propensity to consume (APC).
Fraction or percentage of disposable (after tax) personal income not spent for consumer goods. It generally varies with the level of income.
The average propensity to save is an important economic indicator for a population. The current savings rate of a population can be linked to behaviors, such as saving for retirement, which affect the well-being of a population as it ages. A population's average propensity to save can be affected by demographic factors such as the proportion of older people in the region. Older people have already passed the wealth accumulation phase of their life and are more likely to consume than spend. Younger people who are in the wealth accumulation phase of their life, should be saving their money for large purchases like houses and for retirement.
How to use Average propensity to save in a sentence?
- APS is affected by a mix of demographic and economic factors, such as proportion of old people, rate of inflation, and current interest rates.
- APS is calculated by dividing total savings by income level.
- In economics, average propensity to save (APS) refers to the proportion of income that is saved rather than spent on goods and services.
Meaning of Average propensity to save & Average propensity to save Definition