Question

The martin family has a disposable income of $90,000 annually. assume that their marginal propensity to consume is 0.8 (the martin 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 martin family\'s annual consumer spending?

Answer 1

90000$:100%=x$:80%, x*100=90000*80, x=72000$
The Martin family spends 80% of annual income which is 72000$ and their autonomous consumption spending is 10000$.
So Martin's family annual consumer spending is 72000$+10000$=82000$.