When the Average Propensity to Save (APS) Is 0

question 25

Multiple Choice

When the average propensity to save (APS) is 0.25, then this means

• A) people are spending 25 percent of their disposable income.
• B) people are spending 75 percent of their disposable income.
• C) people are saving $0.25 of the last dollar earned.
• D) people are spending 40 percent of their disposable income and investing the remaining 60 percent.

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Definitions:

Monthly Deposit

A fixed amount of money deposited into an account every month, often as a way to save or invest.

Savings Account

A bank account that earns interest over time, designed for storing money that is not intended for daily expenses.

Compounded Quarterly

A way of calculating interest where the interest is added to the principal balance four times a year, allowing the investment to grow at a faster rate due to the interest on interest effect.

Monthly Payment

The amount of money that needs to be paid each month, commonly associated with loans or subscriptions.