Propensity to save or saving function refers to the relationship between saving and income. At higher levels of income, People are likely to save a larger amount compared to the lower income level. Thus, the amount of saving depends upon and changes according to the level of income. This saving income relationship is called the propensity to save.
Average propensity to save is the ration of total saving to total income. The value of average propensity to save be expressed as
APS = S / Y
Where, APS = Average Propensity to save,
S = Saving
Y = Income
