Actual investment is $62 billion at an equilibrium output level of $620 billion in a private closed economy.The average propensity to save at this level of output is:
A) 0.10.
B) 10.0.
C) 0.62.
D) 0.84.

Question

Quizplus · Accepted Answer

The average propensity to save (APS) is calculated as total savings divided by total income (output). Since investment equals savings in a closed economy at equilibrium, savings is $62 billion. APS = $62 billion / $620 billion = 0.10.

Actual Investment Is $62 Billion at an Equilibrium Output Level