Concepts
- Average Propensity to Consume (APC)
- Average Propensity to Save (APS)
- Saving vs. Dissaving
- Autonomous Consumption/Spending
- Marginal Propensity to Consume (MPC)
- Marginal Propensity to Save (MPS)
Overview
When you think of the word propensity, think of the word likelihood. When we measure our propensity to save or consume, we are measure how likely it is that we will save our money or spend it. The average propensities give us a big picture look becuase it reflects total income. While the marginal propensities give us an incrimental look because it reflects changes in income. In the next lesson, we take an in depth look at a concept called the multiplier, but before you can understand the multiplier and how it’s calculated, you must understand how these propensities work.
Materials
Lecture
Video Coming at Later Date
Quiz
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