In this article we will discuss about the determinants of consumption of goods. Also learn about Engel's law of consumption. Consumption and Its Determinants: Determinants of Consumption Consumption refers to the utilisation of goods and services for the satisfaction of human wants. According to Marshall, it is the process through which human wants are satisfied, and according to Adam Smith [...]
In this article we will discuss about the objective and subjective factors affecting consumption spending. Objective Factors: The most important objective factors are the following: 1. The Rate of Interest: Saving directly depends on interest. When the rate of interest rises saving will increase and consumption will fall. In other words, at high rates of interest people often curtail their [...]
The following article will guide you to learn how to calculate MPC and APC from the consumption function. According to A. H. Hansen, the consumption function is 'the heart of the Keynesian analysis'. The consumption function—'the propensity to consume' in Keynesian terminology—was a fundamental component of the General Theory (1936). That hypothesis states that consumption expenditures are a function of [...]