Suppose That John Allocates $10,000 of His Disposable Income for Necessities

Multiple Choice

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) $10,000.
B) $40,000.
C) $12,000.
D) $8,000.