-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 when real disposable income equals $400?
A) -0.45
B) 0.69
C) 0.7
D) 1.45

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 when real disposable income equals $400?
A) -0.45 
B) 0.69 
C) 0.7 
D) 1.45

Quizplus · Accepted Answer

The average propensity to save (APS) is calculated as savings divided by disposable income. When disposable income is $400, if consumption is greater than income, it implies negative savings. APS = (Savings/Income). If consumption exceeds income, savings are negative, leading to a negative APS. Without specific numbers from the table, the concept is that if consumption is higher than income, APS will be negative, hence option A is correct based on the given options and the understanding of APS.

-Refer to the Above Table