The wong family has a disposable income of $70,000 annually. currently, the wong family spends 80% of new disposable income on consumption. assume that their marginal propensity to consume is 0.8 and that their autonomous consumption spending is equal to $10,000.
what is the amount of the wong family's annual consumer spending?

Annual consumer spending for the Wong family is = $58.000

Explanation:

Disposable income $70,000

Marginal propensity to consume 0.8

Autonomous consumption spending $10,000.

If the disposable income (the money needed to survive) is $10.000 then the $60.000 left to complete $70.000 will be consumed at a rate of 80% or 0.8 cents per each dollar received. Therefore,

Annual consumer spending = $10.000 + ($60.000*0.8)

Annual consumer spending = $10.000 + $48.000

Annual consumer spending = $58.000