Combine the apples, 1 cup sugar, cinnamon, and 1/2 cup water in a saucepan. Cover with a tight fitting lid and heat to boiling.
In a medium bowl, sift together 1 1/2 cup flour, baking powder and salt. Stir in enough milk to make a soft dough.
Drop dough by spoonfuls onto apples. Cover pan with lid and simmer over low heat for 30 minutes. DO NOT LIFT COVER UNTIL DONE! Serve with nutmeg sauce.
To make the nutmeg sauce: In a saucepan, mix 1 cup sugar and 1 tablespoon flour. Stir in 1 cup boiling water and cook, stirring constantly until sauce bubbles. Add butter and simmer gently 5 minutes. Remove from heat and stir in nutmeg. Serve over each serving of apple slump.
