According to Keynes’ psychological law of consumption, although with the increase in the income, the consumption expenditure increases, however, this increase in the consumption is less than the increase in the income. In other words, the rate of increase of consumption is lesser than the rate of increase in income. This is because the consumers do not spend the whole of the increase in their income on consumption. Rather, a part of the increase in the where, AS = Aggregate supply N = Natural resources L = Labour K = Stock of capital T = State of technology Natural resources: Natural resources include the gifts of nature such as fertile land, weather conditions, adequate rainfall, flora and fauna, perennial rivers etc. The abundant availability of all these factors act in favour of production. The aggregate supply of a country bestowed with these natural resources will be higher and vice-versa. income is saved. Thus, the proportionate increase in the consumption is less than the proportionate increase in the income.