Average Propensity To Save

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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 consumer (APC).

INVESTOPEDIA EXPLAINS 'Average Propensity To Save'

The average propensity to save can be affected by factors such as the proportion of older people in an economic region who have less motivation and ability to save, and the rate of inflation, as people spend now and save later when prices are expected to rise.

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