Consumption Function Description

Consumption Function

Relationship between consumption and factors like income, taxes, and savings

Disposable Income

Income after taxes, available for spending and saving

Average Propensity to Consume (APC)

Ratio of consumption to disposable income

Average Propensity to Save (APS)

Ratio of saving to disposable income

Marginal Propensity to Consume (MPC)

Fraction of additional disposable income spent on consumption

Marginal Propensity to Save (MPS)

Fraction of additional disposable income saved

Consumption Surplus

Excess of consumption over disposable income

Aggregate Demand (AD)

Total spending on goods and services at different price levels

Monetary Policy

Control of money supply by central banks to influence interest rates

Expansionary Policy

Policy to increase money supply, decrease taxes, and boost spending

Contractionary Policy

Policy to reduce money supply, increase taxes, and curb spending

Consumption Expenditures

Spending on goods and services by consumers