Unit IX: Consumption, Saving and Investment Functions

Consumption is defined as the amount spent by people for buying goods and services to satisfy wants. In macroeconomics, aggregate or total consumption is considered. The consumption function is the mathematical or quantitative relationship between consumption and determinants of consumption.

In this “Consumption, Saving and Investment Functions - Applied Economics” you will learn about following topics:

Consumption and Consumption Function
Keynes’ Psychological Law of Consumption Function
Propositions of Keynes’ Psychological Law of Consumption Function
Attributes of Consumption Function (APC and MPC)
Difference between APC and MPC
Determinants of Consumption
Measures to Raise Consumption
Saving and Saving Function
Derivation of Saving Curve
Technical Attributes of Saving function
Relationship between APC and MPC, APS and MPS
Types of Saving
Determinants of Saving
Paradox of Thrift
Investment Function
Meaning of Capital and Investment
Types of Investment
Marginal Efficiency of Capital (MEC)
Determinants of Investment
Investment Multiplier
The relation between MPC and Multiplier
Leakage of Multiplier
Importance of Multiplier
Accelerator Principle

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