The consumption function, in economics, the relationship between consumption spending and the various factors determining it. At the household or family level, these factors may include income, wealth, expectations about the level and riskiness of future income or wealth, interest rates, age, education, and family size.
The Consumption Function describes the functional relationship between Consumption and Income.
In Other Term , Is an economic formula that represents the functional relationship between total consumption and gross national income.
The consumption function is represented as:
C = A + MD
where:
C=consumer spending
A=autonomous consumption
M=marginal propensity to consume
D=real disposable income
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