Consumption function

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Revision as of 21:26, 1 January 2018 by imported>Doug Williamson (Update first sentence.)
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Economics.

The consumption function is an equation which defines the relationship between consumption and income.


Usually defined as:

C = a + bY


Where:

C = consumption.

a = consumption at zero income.

b = marginal propensity to consume.

Y = income.


See also