What is the consumption function?
The consumption function is used to calculate the relationship between consumption and disposable income.
Consumption = Autonomus Consumption + (Marginal Propensity to Consume x Real Disposable Income)
Sources and more resources
- Wikipedia – Consumption Function – An overview of the consumption function.
- Khan Academy – Consumption function basics – A basic introduction to the consumption function. This video is part of a larger course on macroeconomics.
- Investopedia – Consumption Function – This page breaks down what the consumption function is. It includes a formula.