NATIONAL CONSUMPTION BEHAVIOR

NATIONAL CONSUMPTION BEHAVIOR Up to now we have examined the budget patterns and consumption behavior of typical families at different incomes. Let’s now consider consumption for the entire nation. This transition from household behavior to national trends...

Brief Review of Definitions

Brief Review of Definitions Let’s review briefly the main definitions we have learned 1. The. consumption function relates the of consumption to the level of disposable income. 2. The saving function relates saving to disposable income. Because what is saved...

The Marginal Propensity to Save

The Marginal Propensity to Save Along with the marginal propensity to consume goes its mirror image. the marginal propensity to save. or MPS. The marginal propensity to save is defined as the fraction of an extra dollar of disposable income that goes to extra...

The Marginal Propensity to Consume

The Marginal Propensity to Consume Modern macroeconomics attaches much importance to the response of consumption to changes in income. This concept is called the marginal propensity to consume, or MPC. The word “marginal” is used throughout economics to...