Question

The Wilson family has a disposable income of $90,000 annually. Assume that their marginal propensity to consume is 0.8 (the Wilson family spends 80% of new disposable income on consumption) and that their autonomous consumption spending is equal to $10,000. What is the amount of the Wilson family's annual consumer spending

Answer 1

Answer:

$82,000

Explanation:

Autonomous consumption spending refers to the necessary and vital spending that consumers must make, even if they have no income.

The Wilson family annual consumer spending will consist of Autonomous consumer spending plus 80 percent of their disposable income.

= (80/100x 90,000) + 10,000

=$72,000 + $10,000

=$82,000