The consumption schedule typically outlines the relationship between disposable income and consumption expenditures among households. It illustrates how much households plan to consume at different levels of disposable income.
Key components of a consumption schedule might include:
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Disposable Income: This is the income available to households after taxes and mandatory deductions. It's the income that families can spend or save.
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Consumption Expenditure: This reflects the amount that households spend on goods and services at varying levels of disposable income.
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Marginal Propensity to Consume (MPC): This represents the change in consumption that results from a change in disposable income, indicating how likely households are to spend additional income.
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Basic Consumption Level: Even when income is zero, households may consume a certain amount (autonomous consumption), which reflects necessary expenditures like food and utilities.
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Slope of the Schedule: The upward slope of the consumption schedule indicates that as disposable income increases, consumption generally rises as well.
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