-Refer to the above table. The table gives the combinations of real disposable income and real consumption for a college student for a year. What is the value of the average propensity to save equal when real disposable income equals $14,000?
A)0.09
B)0.7
C)0.91
D)1.1

Question

-Refer to the above table. The table gives the combinations of real disposable income and real consumption for a college student for a year. What is the value of the average propensity to save equal when real disposable income equals $14,000?
A)0.09 
B)0.7 
C)0.91 
D)1.1

Quizplus · Accepted Answer

The average propensity to save (APS) is calculated as the ratio of savings to disposable income. If the disposable income is $14,000 and the consumption is $12,740 (assuming this is the consumption at $14,000 income), then savings are $1,260. APS = $1,260 / $14,000 = 0.09.

-Refer to the Above Table