Question

Keynesian relationship between income and consumption is termed as:

• A. Consumption
• B. Consumption expenditure
• C. The consumption function
• D. The production function

Hint:

The consumption function shows how consumption varies with income, forming the basis of Keynesian aggregate demand.

Answer 1

The Correct Option is C

The Keynesian consumption function defines the link between disposable income and household spending. It illustrates planned household consumption at different income brackets. Keynes posited that consumption rises with income, though at a progressively slower pace. This forms a core principle for comprehending aggregate demand within Keynesian economic theory.