- When consumption is more than income than saving is negative or when consumption graph is above to income graph than saving is negative.
C>Y, than S becomes -S
- When consumption becomes equals to income or consumption graph meet to income graph at that time saving is zero.
C=Y, than S=0
- When consumption is less than income or consumption graph is below to income than saving increases and becomes positive.
C<Y, than S becomes +S
Relationship between APC and APS
We know that APC = C/Y and APS = S/Y
Y = C + S
Divide both side by Y Y/Y = C/Y + S/Y
1 = C/Y + S/Y
1 = APC + APS
1 - APC = APS
Relationship between MPC and MPS We know that
MPC = dC/dY and MPS = dS/dY
Y = C + S
And, dY= dC+dS Divide both side by dY
dY/dY = dC/dY + dS/dY 1 = dC/dY + dS/dY
1 = MPC + MPS
1 - MPC = MPS