Consumption Function

The consumption function is an economic concept that shows how much people tend to spend based on their income. Essentially, it suggests that as individuals earn more money, they generally spend more, but not necessarily all of it—some is saved. The function helps economists understand the relationship between income and spending habits within an economy, influencing overall economic activity. It's a useful tool for predicting how changes in income levels can affect consumer spending, which in turn impacts economic growth and stability.