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Consumption Fun

Consumption Fun. Meaning of Consumption Fun. It shows the relationship between aggregate consumption expenditure and national income. C= f(Y ). Define. Diilard , “the propensity to consume is a simple relationship between income and consumption.”.

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Consumption Fun

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  1. Consumption Fun

  2. Meaning of Consumption Fun. • It shows the relationship between aggregate consumption expenditure and national income. • C= f(Y )

  3. Define • Diilard, “the propensity to consume is a simple relationship between income and consumption.”

  4. Types of Propensity to Consume • APC = C/Y • MPC = Change in Consumption/ change in Income

  5. Determinants of Con./ Measure to raise the PTC • Foresightedness • Status in the society • Miserliness • Economics independence • Extension of Business • Precautionary Motive • Enlarged Income in future • Occupational Motive • Liquidity Preference • Moderniztion

  6. Change in real income • Change in money income • Change in Distribution of Income • Social Security • Fiscal Policy • Availability of GOODS • Change in fashion and taste • Change in population • DuesenberryHyp

  7. Stable and variable income • Credit facility • Transportation facility

  8. Psychological law of consumption • Assumptions • No change in psychological and institutional complex • Normal conditions • Laissez – faire • PROPOSTIONS OF LAW • Increased agg. Income leads to increased agg. Con but by a smaller amount • Increased income is divided between con and saving

  9. An increase in agg income is unlikely to lead either to less con or less saving than before

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