APC Calculator

Welcome to Omni's APC calculator, a.k.a. the average propensity to consume calculator. A simple tool for when you want to calculate the average proportion of income you've spent on consumption. 💰

Tracking spending and saving habits is a great way to utilize your income, and evaluating your income and expenses could come in handy for your budget plan. If you ever wondered what ratio of your income you spend on consumption rather than saving, the APC index is for you! In the following, you will learn about:

• What the average propensity to consume is;
• The difference between the average and marginal propensity to consume;
• How to calculate average propensity to consume (the APC formula); and
• The use of APC in economics.

The average propensity to consume (APC) measures how much of your disposable income you spend on goods and services. In other words, the average propensity to consume represents the ratio of total consumption to disposable income. APC can be any number from zero to infinity, where the more disposable income you spend on consumption, the higher your APC value. Therefore, low-income households usually have higher APC than high-income households because low-income households pay a larger share of their disposable income on necessities such as food and housing.

Track your APC to observe your spending habits, and don't forget to check out other closely related calculators:

• The marginal propensity to consume calculator;
• The marginal propensity to save calculator; and
• The money multiplier calculator.

In the next section, we discuss the APC formula.

Our APC calculator uses the following formula for average propensity to consume:

where:

• $\rm APC$ – Average propensity to consume;
• $C$ – Total consumption; and
• $Y$ – Disposable income.

Unsure what is your disposable income? Check out our disposable income calculator to see how much of the income you have left after meeting all your tax obligations.

Advanced APC formula

We can further break down the APC formula as the following:

where

• $C_a + cY$ – Consumption function, describing the relationship between $C_a$ and $c$;
• $C_a$ – Autonomous spending (consumption when $Y = 0$);
• $c$ – Marginal propensity to consume; and
• $Y$ – Disposable income.

Now that you know how to calculate APC, let's discuss an example! Imagine your annual disposable income (income that you receive after the deduction of taxes) is $150,000, and your total consumption is $84,500. To calculate APC, all you need to do is divide $84,500 by $150,000, which equals 0.563; therefore, you consume around 56% of your income. Now use our APC calculator to calculate your own APC index.

Although related, average propensity to consume and marginal propensity to consume measure different things. The average propensity to consume (APC) looks at the ratio of consumption expenditure to disposable income. On the other hand, marginal propensity to consume (MPC) determines how consumption patterns change when income increases.