Show your calculations for (a) to (d):

a) If disposable income is $3,000 and savings $1,200, how much is the average propensity to consume?

b) If disposable income increases from $250 to $300 and saving increases from $40 to $50, how much is the marginal propensity to save?

c) If your income is $35,000 and the average propensity to save is 0.46, what is consumption?

d) If you spend $35,000 and your income is $60,000, what is your average propensity to save?

Question No.2: Based on the information in the following table:

Income Consumption Saving

$30,000 $30,000 0

40,000 35,000 5,000

50,000 40,000 10,000

a) What is the Marginal Propensity to Consume?

b) Since the APC varies with income level, what is the Average Propensity to Consume at income level I=$40,000?

c) What is the Marginal Propensity to Save?

d) Since the APS varies with income level, what is the Average Propensity to Save at income level I=$40,000?