Test Index

JAMB Economics 2020 Paper

Question : 11

Total: 40

Solution:

Concept:

The average propensity to consume (APC) shows the fraction of income that people spend on consumption.

Explanation:

The formula for APC is:

APC = \frac{C}{Y}

Here, aggregate consumption

C

400

and aggregate income

Y

500

Substitute the values:

APC = \frac{400}{500} = 0.80

This means that out of every

1

of income, households spend

0.80

Answer:

Option B.

0.80

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