The disposable income (DI) and consumption (C) schedules are for a private, closed economy. All figures are in billions of dollars. Refer to the data above. At the $320 billion level of disposable income, the average propensity to save is:
A) .015
B) .075
C) .335
D) .925

Question

The disposable income (DI) and consumption (C) schedules are for a private, closed economy. All figures are in billions of dollars.  Refer to the data above. At the $320 billion level of disposable income, the average propensity to save is:
A) .015 
B) .075 
C) .335 
D) .925

Quizplus · Accepted Answer

Average propensity to save (APS) = Saving (S) / Disposable income (DI)
At the $320 billion level of disposable income, the corresponding consumption is $300 billion (according to the consumption schedule), and therefore saving is:
S = DI - C = $320 billion - $300 billion = $20 billion
Therefore, APS = S / DI = $20 billion / $320 billion = 0.0625 = 0.075 (rounded to three decimal places). 
Thus, the correct answer is B.

The Disposable Income (DI) and Consumption (C) Schedules Are for a Private