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Average Propensity to Consume = Total Consumption divided by Total income

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Average Propensity to Consume = Total Consumption divided by Total income

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average propensity to consume is the fraction of the total amount of disposable income that households spend on consumption whereas marginal propensity to consume is the amount that consumption increases for every additional dollar of disposable income.

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The average propensity to consume is the fraction of total disposable income that households spend on consumption (as opposed to saving for example) whereas marginal propensity to consume is the additional consumption that results from an additional dollar of disposable income.

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the fraction of total disposable income that households spend on consumption

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1/1-(mpc-mpm)

mpc- marginal propensity to consume

mpm- marginal propensity to import

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