AP Macroeconomics Question 74: Answer and Explanation

Test Information

Use your browser's back button to return to your test results.

Question: 74

12. Julia would spend $30 per week even if she made no income. Her weekly income is $1,000 and her marginal propensity to consume is 0.5. How much does Julia save per week?

  • A. $500
  • B. $ 35
  • C. $530
  • D. $ 80
  • E. $470

Correct Answer: E

Explanation:

E Julia's autonomous consumption is $30 and she spends half of each additional dollar she earns, so she spends a total of $30 + $500 = $530. This leaves $1,000 ? $530 = $470 for her savings.