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What Is The Consumption Curve?

2010/7/21 22:26:00 43

Consumption Curve

Consumption curve is a curve showing the relationship between household consumption and income.

As incomes increase and consumption increases, the consumption curve is tilted to the right.

At the same time, due to the role of diminishing marginal propensity to consume, with the increase of income, the rate of consumption increase is becoming slower and slower, so the consumption curve tends to be more and more smooth with the increase of income.

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Another Case Of Consumption Curve

When analyzing the relationship between short-term consumption and income, especially when the marginal consumption propensity is not considered, the consumption function can be expressed as a linear consumption function: C = a + bY