If an individual earns $1,500 a month and spends it evenly throughout the month, transaction balances will average
A) $50 per month.
B) $750 per month.
C) $1500 per month.
D) $3000 per month.

Question

Quizplus · Accepted Answer

If the individual spends $1,500 evenly throughout the month, the average transaction balance will be $750 per month. This is because the individual will be spending $50 every day, so the balance will fluctuate between $1,450 and $1,550 on a daily basis, which averages out to $750 per month.

If an Individual Earns $1,500 a Month and Spends It