If Justin spends $35,000 when his income is $60,000, what is his average propensity to save?
A) 0.3
B) 0.42
C) 0.58
D) 0.7

Question

Quizplus · Accepted Answer

Average propensity to save (APS) is the proportion of income that is saved. It is calculated by dividing savings by income.

Savings = Income - Spending
Savings = $60,000 - $35,000
Savings = $25,000

APS = Savings / Income
APS = $25,000 / $60,000
APS = 0.4167 ≈ 0.42

Therefore, Justin's average propensity to save is 0.42, which is answer choice B.

If Justin Spends $35,000 When His Income Is $60,000, What