Following is consumption schedules for three private closed economies.DI signifies disposable income and C represents consumption expenditures.All figures are in billions of dollars. Refer to the above data.At an income level of $400 billion, the average propensity to save in economy (2) is:
A).9125.
B).0725.
C).0875.
D).9305.

Question

Following is consumption schedules for three private closed economies.DI signifies disposable income and C represents consumption expenditures.All figures are in billions of dollars.  Refer to the above data.At an income level of $400 billion, the average propensity to save in economy (2) is:
A).9125. 
B).0725. 
C).0875. 
D).9305.

Quizplus · Accepted Answer

The consumption expenditure at an income level of $400 billion in economy (2) is $55 billion. Therefore, the savings at that income level would be $400 billion - $55 billion = $345 billion. The average propensity to save is savings divided by income, which is $345 billion / $400 billion = 0.0875, or 8.75%. Therefore, the answer is (C).

Following Is Consumption Schedules for Three Private Closed Economies