Mike's annual income is $45,000, and he spends $30,000 for current needs. Mike's average propensity to consume is 80 percent.
Answer the following statement true (T) or false (F)
False
Rationale: Your average propensity to consume is the percentage of each dollar of income, on average, that is spent for current needs rather than savings. Mike's propensity to consume = $30,000 รท $45,000 = 67%. See 1-1: The Rewards of Sound Financial Planning.
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