Autonomous Consumption Is 700 and the Marginal Propensity to Consume

question 56

Short Answer

Autonomous consumption is 700 and the marginal propensity to consume is 0.6.Calculate the average propensity to save when disposable income is (a)10,000,(b)12,000,and (c)15,000.

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Definitions:

Compounded Quarterly

A method of calculating interest where the accrued interest is added to the principal sum four times a year, affecting future interest calculations.

Saving Account

A savings account in a banking institution that guarantees the safety of the deposited money while offering a low interest rate.

Annual Interest Rate

The percentage of interest that will be charged or earned on an amount of money over the span of a year.

Deposit

Money placed into a financial institution for safekeeping, which can also earn interest depending on the type of account.