Macroeconomics : Level of Income, Consumption, Saving

We know that economic recycle of duo sector is consists "firms" & "households".

Firms

• Responsible to provide goods (product & services) to households

• Receive production factor for output production from households

       Households

• Provide firms the factor of production
• Receive income from firms for the factor that provide to firms
• Income of households contribute to "consumption" and "saving". 

Formula that usually use to explain level of consumption and saving: 

(The Average Propensity To Consume : APC) 

• The ratio between level of households consumption (c) and level of income (y). 
• Formula:    

                                          C

                                          Y

• It shows more higher level of income is more smaller of APC value.

(The Average Propensity To save: APS)

• The ratio between level of households saving (s) and level of income (y). 
• Formula: 

                                             S

                                             Y

• It shows more higher level of income is more smaller of APS value. 

(Marginal Propensity To Consume: MPC) 

• The ratio between ∆ in level of households consumption (c) cause the ∆ in level of income. 
• Formula: 

                                              ∆C

                                              ∆Y

• It shows if the income increase 1%, so how much percentage the ∆ in level of households consumption. 

(Marginal Propensity To Save: MPS) 

• The ratio between ∆ in level of households saving (s) cause the ∆ in level of income. 
• Formula: 

                                              ∆S

                                              ∆Y

• It shows if the income increase 1%, so how much percentage the ∆ in level of households saving. 
• Value of MPC and MPS, must between 0 and 1. 
• if value of MPC + MPS must equal to 1.