Becky graduated with a master degree in Personal Financial Planning.After working two years in a small financial planning firm,Becky earns $60,000 annually and saves $10,000 a year.What is her average propensity to consume?
A) 16.7%
B) 25.5%
C) 75.7%
D) 83.3%
E) 95.5%

Question

Quizplus · Accepted Answer

The average propensity to consume is calculated by dividing consumption by income. Becky saves $10,000 from her $60,000 income, so she consumes $50,000. Therefore, her average propensity to consume is $50,000 / $60,000 = 0.833 or 83.3%.

Becky Graduated with a Master Degree in Personal Financial Planning