ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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income and saving
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price and consumption
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consumption and income
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consumption and saving
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Detailed explanation-1: -The term consumption function refers to an economic formula that represents the functional relationship between total consumption and gross national income (GNI).
Detailed explanation-2: -In this direction, Keynes (1936; 2009, p. 158) suggested that individuals tend to increase consumption as their income increases, but to a lesser extent. This fundamental psychological law states that as the level of income increases, the difference between income and consumption increases as well.
Detailed explanation-3: -consumption function, in economics, the relationship between consumer spending and the various factors determining it. At the household or family level, these factors may include income, wealth, expectations about the level and riskiness of future income or wealth, interest rates, age, education, and family size.