What do you mean by Consumption Function? Briefly explain Linear Consu

1.	What do you mean by Consumption Function? Briefly explain Linear Consumption Function.
Answer» Consumption Function: - Consumption Function shows functional relationship between total consumption and total income. C = f (Y) Where, C = Consumption; Y= Level of income Linear consumption function: - If the consumption function is given on the basis of constant marginal propensity to consume, is called linear consumption. C = C + bY Where, C = Consumption; C = Autonomous consumption / minimum level of consumption; b = Marginal propensity to consume; Y= Level of income.

What do you mean by Consumption Function? Briefly explain Linear Consumption Function.

Answer»

Consumption Function: - Consumption Function shows functional relationship between total consumption and total income.

C = f (Y)

Where, C = Consumption; Y= Level of income

Linear consumption function: - If the consumption function is given on the basis of constant marginal propensity to consume, is called linear consumption.

C = C + bY

Where, C = Consumption; C = Autonomous consumption / minimum level of consumption; b = Marginal propensity to consume; Y= Level of income.

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What do you mean by Consumption Function? Briefly explain Linear Consumption Function.

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