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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
Among them, a and B are constants.
In the formula, a is called autonomous consumption, and it is not affected by the change of income. BY is the consumption caused by income, and it increases with the increase of income.
The linear consumption function shows that with the increase of income, consumption increases by a fixed proportion of B. At this time, the consumption curve is a straight line tilting to the right.
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- What Is Consumption Function?
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- What Is The Kos Theorem?
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