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Propensity is defined as a natural tendency. An example of propensity is an inborn love for writing. pl. -Â·ties. 1  a natural inclination or tendency; bent.  Obs. favorable inclination; bias (for)
Average propensity to consume refers to the ratio of consumption expenditure to the corresponding level of income. APC = Consumption (C) / Income (Y) If consumption expenditure is Rs 70 crores at national income of Rs 100 crores, Rs 70. Then: APC C/Y = 70/100 = 0.70, i.e. 70% of the income is spent on consumption.