Actual investment is $62 billion at an equilibrium output level of $620 billion in a private closed economy.The average propensity to save at this level of output:
A)is 0.10.
B)is 10.
C)is 0.62.
D)cannot be determined on the basis of the information given.

Question

Quizplus · Accepted Answer

The average propensity to save (APS) is calculated as total savings divided by total income. Since the economy is closed and private, savings equal investment. Therefore, APS = $62 billion / $620 billion = 0.10.

Actual Investment Is $62 Billion at an Equilibrium Output Level