AP Macroeconomics Question 74: Answer and Explanation
Use your browser's back button to return to your test results.
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
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.