Autonomous consumption
Nowadays, Autonomous consumption has become a topic of great relevance in today's society. With the advancement of technology and globalization, Autonomous consumption has acquired a fundamental role in our lives. On both a personal and professional level, Autonomous consumption has made a significant impact on the way we relate, work and entertain ourselves. This is why it is essential to fully understand the impact that Autonomous consumption has on our daily lives, as well as the implications it entails for the future. In this article we will explore in detail everything related to Autonomous consumption, from its origins to its influence today, with the aim of offering a complete and updated vision of this very relevant topic.
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Autonomous consumption (also exogenous consumption, autonomous spending[1]) is the consumption expenditure that occurs when income levels are zero. Such consumption is considered autonomous of income only when expenditure on these consumables does not vary with changes in income; generally, it may be required to fund necessities and debt obligations. If income levels are actually zero, this consumption counts as dissaving, because it is financed by borrowing or using up savings. Autonomous consumption contrasts with induced consumption, in that it does not systematically fluctuate with income, whereas induced consumption does.[2] The two are related, for all households, through the consumption function:
where
- C = total consumption,
- c0 = autonomous consumption (c0 > 0),
- c1 = the marginal propensity to consume (the gradient of induced consumption) (0 < c1 < 1), and
- Yd = disposable income (income after government taxes, benefits, and transfer payments).
See also
References
- ^ "31.31: The Aggregate Expenditure Model". Economics - Theory Through Applications. LibreTexts.
- ^ Colander, David C. (2004). Macroeconomics (Fifth ed.). Boston, MA: McGraw-Hill/Irwin. pp. G–1 & G–4 (Glossary). ISBN 0-07-255119-4.
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