Downloaded 11 times
Uploaded byTimothy Durant
Keynesian consumption function
The document discusses Keynesian consumption theory, including autonomous consumption which exists even without income, induced consumption which is based on and increases with income, and the consumption function C=a+b(Y-T) where C is consumption, a is autonomous consumption, b is the percentage of income consumed, and Y-T is disposable income. It was prepared by Timothy Durant for Queen's College Business Studies in 2012.
More Related Content
Similar to Keynesian consumption function
Keynesian consumption function
- 1.
- 2. Quuen'sCollegeBusinessStudies2012 Keynesian Consumption Function Autonomous Consumption Induced Consumption This isthe level of consumption when income is zero. It has no relationship with income This consumption is based on income. It positively related to income.
- 3. Quuen'sCollegeBusinessStudies2012 Autonomous Consumption Income =0 Even with no income, consumers must consume to survive. This consumption may be financed by savings or “borrowing” from a friend.
- 4. Quuen'sCollegeBusinessStudies2012 Induced Consumption Income >0 The function includes consumption which is directly related to income. The function asserts that consumers will spend a portion of their income.
- 5. Quuen'sCollegeBusinessStudies2012 Keynesian Consumption Function C =a + b (Y –T) Consumption Autonomous Consumption Percentage of income consumed Disposable Income