Definition – What is the average propensity to save?
APS is a ratio of savings to total income. It is the percentage of total income that is put into savings (instead of consumption).
Formula – How to calculate APS
Average Propensity to Save = Savings ÷ Total Income
Savings is $300,000 and total income is $600,000.
APS = $300,000 ÷ $600,000 = 0.500
Therefore, average propensity to save is 0.500.