Suppose that John allocates $10,000 of his disposable income for necessities. Any additional income beyond that is both spent and saved. Assume he has a disposable annual income of $50,000 and an MPC=0.8. Based on this information the amount of money John should save would be:
A. $8,000.
B. $10,000.
C. $12,000.
D. $40,000.
Answer: A
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