Last year, Ted earned an after-tax income of $40,000, spent $30,000, and saved $10,000. How much money did he make available to firms for investing?

Question

$12,000

$4,000

$5,000

$10,000

Answer 1

To determine how much money Ted made available to firms for investing, we focus on his savings. After spending $30,000 from his after-tax income of $40,000, he saved $10,000. This savings is what he makes available to firms for investing.

So the answer is:

$10,000