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Consumption Function Calculator

LAST UPDATE: August 29th, 2018

Calculator

What is the consumption function?

The consumption function is used to calculate the relationship between consumption and disposable income.

Formula

Consumption = Autonomous Consumption + (Marginal Propensity to Consume x Real Disposable Income)

Example

Autonomous Consumption is 400,000, MPC is 0.8, and real disposable income is 800,000.

Consumption Function = 400,000 + (0.8 x 800,000) = 400,000 + 640,000 = 1,040,000.

Therefore, the consumption function is 1,040,000.

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