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Topic: Consumption function


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In the News (Tue 23 Jul 19)

  
  Consumption function   (Site not responding. Last check: 2007-10-26)
Chronic Effects of Alcohol The relationship between consumption and deterioration in brain structure and function is described.
PT Cruiser Oil Consumption Problems Read about oil consumption problems with the PT Cruiser, and Chrysler's response that oil consumption of one quart per 1,000 miles is normal even for brand new PT Cruisers.
Renewable Energy - Alternative Consumption and the consumption of alternatives An expose of the fantasy world of "sustainable development", showing how current levels of consumption are not sustainable no matter what alternatives are consumed.
www.serebella.com /encyclopedia/article-Consumption_function.html   (436 words)

  
 Consumption function -- Facts, Info, and Encyclopedia article   (Site not responding. Last check: 2007-10-26)
Consumption function -- Facts, Info, and Encyclopedia article
It is made up of autonomous consumption that is not influenced by current income and induced consumption that is influenced by the economy's income level.
where C = total consumption, a = autonomous consumption,mpc = the (additional info and facts about marginal propensity to consume) marginal propensity to consume, and Y = disposable income (income after taxes and transfer payments).
www.absoluteastronomy.com /encyclopedia/c/co/consumption_function.htm   (94 words)

  
 aw_miller_econtoday_12|Student Resources|Additional Readings|Extended-Coverage Topics|Chapter 12|The Permanent-Income ...
The hypothetical consumption functions in the graphs are similar to actual short-run consumption functions; the empirical evidence suggests that distinct short-run and long-run consumption functions exist.
Now consider statement 2, which, in effect, says that people base their consumption on their permanent income and largely ignore deviations from that permanent income if they expect the deviations to be only temporary.
This point is very important, because the consumption function normally used in textbooks maintains that current income constrains current consumption, but the permanent-income hypothesis maintains that wealth is the true constraint on current consumption.
wps.aw.com /aw_miller_econtoday_12/0,7965,904285-,00.html   (1512 words)

  
 Intermediate Macroeconomics - Consumption
In the Keynesian consumption function current disposable income is the only determinant of consumption, as shown in equation (1).
The change in consumption from one year to the next divided by the change in income is the marginal propensity to consume.
Consumption reported in the national GDP accounts and used in empirical studies does not correspond to the theoretical meaning of consumption.
www.iso.gmu.edu /~tlidderd/311/ch10Lect.html   (5647 words)

  
 Sticky Prices and Expenditure Plans   (Site not responding. Last check: 2007-10-26)
Consumption expenditure in excess of this amount is called induced consumption, which is expenditure that is induced by an increase in disposable income.
The slope of the U.S. consumption function in Fig.
Consumption expenditure depends on disposable income, so the greater the increase in income taxes, the smaller is the increase in consumption expenditure, other things remaining the same.
www.hkkk.fi /~korpela/kansanta/permak99/permak9961/parkin28s.htm   (8992 words)

  
 The Consumption Function   (Site not responding. Last check: 2007-10-26)
A key tool in building up economists' standard model of the business cycle is the so-called consumption function: an algebraic relationship between national income and consumption spending that tells us what, for each possible level of national income, the level of consumption spending will be.
We build up the consumption function from two facts: (1) that there is a baseline level of consumption spending that would continue even if incomes were zero, and (2) that for each $1 increase in total incomes, consumption spending increases by a smaller amount--say $c'.
The parameter c' of the consumption function is called the marginal propensity to consume.
econ161.berkeley.edu /multimedia/consumption.html   (114 words)

  
 The Expenditure Model
It is represented by B, the slope of the consumption function.
The consumption function can be described by a simple linear equation where aggregate consumption = autonomous consumption + the marginal propensity to consume X income.
And at the point where the consumption function crosses the 45° line, consumption equals income and savings is zero, we call the assumption that households can only consume or save their income.
www.swlearning.com /economics/cebula/macro_b02_dialog.html   (699 words)

  
 [No title]
That intertemporal aspect is suppressed in the Keynesian consumption function as evidenced, for example, by the fact that it omits the interest rate entirely.
To understand the effects of changes in income on consumption, we therefore need to know whether a change in income is temporary or permanent, since a $1,000 temporary increase in income leads to a small increase in consumption, whereas a $1,000 permanent increase in income leads to a large increase in consumption.
Recent work on consumption has added rational expectations into the story, which really means assuming that people are very sophisticated in their guesses about what their income is going to do.
www.nd.edu /~tcosiman/ch-15.html   (3953 words)

  
 Consumption Function   (Site not responding. Last check: 2007-10-26)
The part of consumption that is independent of income, Co, can be sustained by drawing on past savings or borrowing.
Milton Friedman, for example, argues that consumption is determined by peoples’ estimates of their “permanent” or long-term, average income.
The relationship between C and Y is called the consumption function.
www.econ.iastate.edu /classes/econ102/merrill/fall97/chap6-10/sld082.htm   (128 words)

  
 [No title]
Assess the importance of excess sensitivity and liquidity constraints on current consumption Key Conceptslife-cycle hypothesislong-run MPCwealthexcess sensitivitypermanent incomeliquidity constraintstransitory incomeshort-run MPC Introduction In this second topic on consumption theory we will look in detail at the two modern theories of the consumption function that were developed (independently) to explain the conflicting empirical evidence.
However, the consumption function for all households would clearly have the same form as it would be the aggregate of all the individual consumption functions.
Deriving the Consumption Function To derive the actual equation of the consumption function, we need to combine the expression for permanent income described in the last section with the fundamental assumption of the permanent income hypothesis that consumption is proportional to permanent income.
www.lmu.ac.uk /lbs/epia/people/beachill/macro2/mac2ch6.doc   (2012 words)

  
 SFB 504 glossary: Consumption   (Site not responding. Last check: 2007-10-26)
The dependence of consumption on current income is described in the Keynesian consumption function while the dependence of consumption on lifetime income is described in the life cycle hypothesis and the permanent income hypothesis.
The interest rate influences consumption via saving because of the intertemporal substitution from one period to a future period: Income that is not used for consumption purposes can be saved and consumed one period later, earning an interest payment and hence allowing for more consumption in the future.
This increase in the absolute amount available for consumption, as reflected in the interest rate, has then to be compared with the individualĀ“s rate of time preference (the latter expressing her patience with respect to later consumption, or, more generally, to delayed utility derived from consumption).
www.sfb504.uni-mannheim.de /glossary/consum.htm   (350 words)

  
 mac6_Q1.html   (Site not responding. Last check: 2007-10-26)
The consumption function basically tells you that this person is planning to spend $250 when they have no income (DI=0), and then spend 75% of every dollar they earn (the MPC =.75).
The consumption function tells you how a household plans to spend their income, and the savings function, correspondingly, tells you what is left over to put into a savings account.
The consumption function basically tells you that this person is planning to spend $250 (autonomous consumption) when they have no income (DI=0), and then spend 75% of every dollar they earn (the MPC =.75).
carbon.cudenver.edu /~eherr/mac_ch6.html   (3215 words)

  
 Aggregate Demand
n The consumption function is the mathematical relationship indicating the rate of desired consumer spending at various income levels.
n Shifts in the consumption function are reflected in shifts of the aggregated demand curve.
n An upward shift of the consumption function implies an increase (a rightward shift) of the aggregate demand.
www.neylonlaw.com /Suffolk/PPT/Chap009.rtf.htm   (1387 words)

  
 OLDRICH KYN and JIRI SLAMA: CONSUMPTION FUNCTION FOR CZACHOSLOVAKIA Introduction 1
and that, therefore, capacity constraints, as represented by the production function, for example, were much more important for explaining the level of economic activity than any of the elements of aggregate demand.
and, like the consumption functions for the market economies, were supposed to model consumers' behavior.
If, for example, aggregate consumption were constrained by the supply of consumer goods rather than by demand, then empirical estimates obtained by regressing the observed consumption expenditures on the observed disposable income would not properly represent
www.bu.edu /econ/faculty/kyn/newweb/okyn/OKpers/Empirical_Studies/Cons_FU/confu_intro1.htm   (785 words)

  
 literature preference
Consumption Utility - it is a criterion (or index) used to evaluate the effectiveness of customers consumption.
A low value of consumption utility, say 0.15, indicates that a customer is not satisfied with the consumption of a certain commodity; while high value, say 0.96, indicates that the customer is very satisfied.
Consumption utility function - The behavioral characteristics of human beings can be represented by the concept of consumption utility, and consumption utility function is the mathematical description of this concept.
www.zaptron.com /literature/preference.htm   (1428 words)

  
 Estimate a consumption function for the UK economy explaining the economic theory and statistical techniques you have ...
Estimate a consumption function for the UK economy explaining the economic theory and statistical techniques you have used.
Coursework and Essays: Uncategorised: Estimate a consumption function for the UK economy explaining the economic theory and statistical techniques you have used
Below is a short sample of the essay "Estimate a consumption function for the UK economy explaining the economic theory and statistical techniques you have used.".
www.coursework.info /i/73541.html   (969 words)

  
 OLDRICH KYN and JIRI SLAMA: CONSUMPTION FUNCTION FOR CZACHOSLOVAKIA
Whether this is true or not, we shall proceed to estimate the consumers' consumption function as if the equilibrium existed.
Naturally, our next step should be to test whether the estimated consumption function would reveal that the Czechoslovak consumers have behaved according to the permanent income or life cycle hypotheses.
The least squares estimates of the Koyck transformation are known to be inconsistent and may lead to biased estimates of the mean lag.
www.bu.edu /econ/faculty/kyn/newweb/okyn/OKpers/Empirical_Studies/Cons_FU/confu_consumer.htm   (1211 words)

  
 Lecture 17. Oct. 30 - Ch. 11
In fact, the slope of the consumption function is the marginal propensity to consume (defined as the change in consumption associated with a change in disposable income, and approximately equal to 0.8 for the period from 1970-94).
Since we've already seen through the consumption function that consumption is linked to disposable income, and disposable income equals real GDP minus net taxes, it should be clear that consumption will be related to real GDP.
The import function shows the relationship between imports and real GDP (reflecting the underlying influence of real GDP in increasing imports), and the slope of that function (presently about 0.15, up from only 0.07 in 1970) is the marginal propensity to import.
econ.la.psu.edu /~dshapiro/l17oct30.htm   (1293 words)

  
 E112RCh1-2-Introduction and Use of Graphs in Macroeconomics
There will be a shift down in the entire consumption function and a movement to the left along the new consumption function.
There will be a shift up in the entire consumption function and a movement to the left along the new consumption function.
A linear consumption function for household X illustrates that if the family’s income were $10,000 it would consume $9,000, and if the family’s income were $20,000 it would consume $16,000.
employees.oneonta.edu /beckei/E112RCh1-2.html   (733 words)

  
 Integrating the Keynesian Relationships
As the simple Keynesian consumption function predicted that as income rose, savings would take an ever greater share of it, efforts were needed to come up with a "better" consumption function.
The most celebrated liquidity preference function was the attempt to formalize the speculative demand for money (as an "asset") by James Tobin in his famous article "Liquidity Preference as Behavior Towards Risk" (1958).
As Franco Modigliani (1971) stresses, one of the new avenues of transmission was consumption.
cepa.newschool.edu /het/essays/keynes/relationships.htm   (4587 words)

  
 Aggregate Expenditure: Consumption, Investment, Government Purchases, and Net Exports
The Consumption Function - The relationship between the level of income in an economy and the amount households plan to spend on consumption, other things constant.
The relationship between consumption spending and disposable income is captured by the slope of the consumption function.
The simplest investment function assumes that planned investment is autonomous investment is independent of level of income.
business.baylor.edu /Tom_Kelly/2307ch9.htm   (1812 words)

  
 Introduction to Macroeconomics - Chapter 22
The reason for price stickiness may be non-economic (people are reluctant to accept lower paying jobs even when unemployed) or economic (union wage contracts may prevent firms from cutting wages and thereby reducing prices, or firms may be reluctant to reduce wages because it reduces their workers' incentive to make a good effort).
Consumption function represents "planned" or "desired " level of consumption expenditures for a given level of income
If we had considered income taxes, which are a function of income, then the model would become more complicated because changes in income tax rates would not only shift the aggregate expenditure curve up and down but also change the slope of the curve.
mason.gmu.edu /~tlidderd/104/ch22Lect.html   (1142 words)

  
 Consumption 1   (Site not responding. Last check: 2007-10-26)
Keynes suggested that there was a "psychological law" that any increase in income would result in an increase in consumption, but that the increase in consumption would be in less than a one-to-one proportion.
From one additional dollar of income (after taxes), the Marginal Propensity to Consume is the fraction of the dollar that is spent on consumption.
where C is the consumption expenditure, (in billions of 1992 dollars, for example), Y the national income (in the same units) and a and b are constants.
william-king.www.drexel.edu /top/prin/txt/equil/CF1.html   (266 words)

  
 CHAPTER 4. AGGREGATE EXPENDITURES   (Site not responding. Last check: 2007-10-26)
The non-income determinants of consumption, including the price level (P), the real interest rate (r), and any other relevant determinants, are assumed to be constant in order to plot the path of the consumption function in two dimensions (E and Y).
Logic suggests that the consumption function may not be perfectly linear.
Keynes hypothesized that consumption spending is a fairly stable function of income and that it would not often shift or not by great magnitudes.
facweb.furman.edu /~dstanford/macro/m4.htm   (2965 words)

  
 Consumption Function   (Site not responding. Last check: 2007-10-26)
A linear specification of the consumption function is demonstrated here and, there are two parameters that may be selected to examine how the function is affected.
The consumption function specifies that consumption (C) is a function of income (Y) and appears in the form:
Please select values of autonomous consumption (Ca) and the marginal propensity to consume (MPC) and, click on the rectangular button to view the graphical illustration depicting these values for the consumption function, along with some descriptive narrative.
nova.umuc.edu /~black/consf1000.html   (134 words)

  
 The Consumption Function
The current level of consumption is a straightforward function, driven by the current level of income.
A long-run consumption function can be drawn, assuming that there is a growth trend.
If this is true, previous peak income would have been that of last year and thus would give a consumption function that looks like it depends on current income.
www.theshortrun.com /classroom/doctrines/consumption.html   (707 words)

  
 Tutor2u - Keynesian Consumption Function
The Keynesian Theory of consumption is that current real disposable income is the most important determinant of consumption in the short run.
This is the change in consumption divided by the change in income.
The consumption - income relationship changes when other factors than income change - for example a rise in interest rates or a fall in consumer confidence might lead to a fall in consumption spending at each level of income.
www.tutor2u.net /economics/content/topics/consumption/consumption_theory.htm   (410 words)

  
 literature demand
Abstract: Following a brief description of demand function in econometrics, the fuzzy consumption function theory is introduced that characterizes the dynamically behaviors of market demand and fluctuation.
The fuzzy demand functions discussed here are developed based on the fuzzy consumption utility function theory developed by Zaptron scientists.
Mathematically, the fuzzy demand function is a more accurate measure on the consumption demand, compared against a traditional (non-fuzzy) demand function.
www.zaptron.com /literature/demand.htm   (1041 words)

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