Question

If income changes from 1000 to 1500 and saving changes from 200 to 250, then calculate APS .

• A. 0.2
• B. 0.16
• C. 0.2 for the time period 1 and 0.16 for the time period 2
• D. 0.16 for the time period 1 and 0.2 for the time period 2

Answer 1

The correct option is C 0.2 for the time period 1 and 0.16 for the time period 2

APS $=\frac{Savings}{Income}$

We can calculate APS for both time period.

In the first time period, S = 200 and Y = 1000.

APS = $\frac{200}{1000}=$ $0.2$

In the second time period, S = 250 and Y = 1500.

APS = $\frac{250}{1500}=$ $0.16$