Suppose that Christina has a disposable annual income of $50,000 and an MPC of 0.8. She allocates $10,000 of her income for necessities, and the remaining money is both spent and saved. Based on this information, what is Christina's autonomous consumption?

Question

Quizplus · Accepted Answer

Autonomous consumption is the minimum level of consumption that an individual must maintain even if they have no income. In this case, Christina's autonomous consumption would be the amount she spends on necessities, which is $10,000. The MPC of 0.8 means that for every additional dollar she earns, she will spend 80 cents and save 20 cents. This information is not needed to calculate her autonomous consumption.

Suppose That Christina Has a Disposable Annual Income of $50,000