Google
Sunday 
December 16, 2018 

AmosWEB means Economics with a Touch of Whimsy!

AmosWEBWEB*pediaGLOSS*aramaECON*worldCLASS*portalQUIZ*tasticPED GuideXtra CrediteTutorA*PLS
COMPLEX EXPENDITURE MULTIPLIER: The ratio of the change in aggregate output (or gross domestic product) to an autonomous change in an aggregate expenditure (consumption expenditures, investment expenditures, government purchases, or net exports) when all induced components are included in Keynesian analysis. This is the most comprehensive expenditure multiplier possible and includes not only the marginal propensity to consume/save, but also the marginal propensities for government purchases, investment, imports, and taxes. This should be compared with the simple expenditure multiplier that includes only induced consumption

Visit the GLOSS*arama


INTERCEPT, CONSUMPTION LINE:

The intercept of the consumption line indicates autonomous consumption, consumption that does not depend on the level of income or production. This can be thought of as the baseline level of consumption that would be undertaken if income falls to zero. Autonomous consumption is affected by the consumption expenditures determinants, which cause a change in the intercept and a shift of the consumption line. The value of the intercept of the saving line is the negative of the value of the intercept of the saving line.
Consumption Line
Consumption Line
The consumption line, also termed propensity-to-consume line or consumption function, shows the relation between consumption expenditures and income for the household sector. The income measure commonly used is national income or disposable income. Occasionally a measure of aggregate production, such as gross domestic product, is used instead.

A representative consumption line is presented in the exhibit to the right. This red line, labeled C in the exhibit, is positively sloped, indicating that greater levels of income generate greater consumption expenditures by the household sector. This positive relation corresponds to the fundamental psychological law of Keynesian economics.

The consumption line graphically illustrates the consumption-income relation for the household sector, which is the foundation of the aggregate expenditures line used in Keynesian economics to identify equilibrium income and production. For reference, a black 45-degree line is also presented in this exhibit. Because this line has a slope of one, it indicates the relative slope of the consumption line.

The intercept of the consumption line indicates the intersection point between the consumption line and the vertical consumption axis. The consumption line intersects the vertical axis at a value of $1 trillion. Theoretically, this is a minimum "baseline" level of consumption, the amount of consumption undertaken even if income falls to zero. More to the point, this intersection indicates autonomous consumption--consumption expenditures unrelated to income. Click the [Intercept] button to illustrate.

Autonomous consumption is consumption expenditures by the household sector that are unrelated to and unaffected by the level of income or production. This is best indicated by a zero level of income. While individuals occasionally come face-to-face with autonomous consumption, as their incomes drop to zero due to unemployment, for the aggregate economy autonomous consumption is mostly an unlikely theoretical extrapolation.

However, from an analytical perspective, the intercept of the consumption line is affected by the consumption expenditures determinants. These are ceteris paribus factors other than income that affect consumption, but which are held constant when the consumption line is constructed. Any change in these determinants cause the consumption line to shift, which necessarily means a new intercept and a new level of autonomous consumption.

<= INTERCEPT, AGGREGATE EXPENDITURES LINEINTERCEPT, GOVERNMENT PURCHASES LINE =>


Recommended Citation:

INTERCEPT, CONSUMPTION LINE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2018. [Accessed: December 16, 2018].


Check Out These Related Terms...

     | consumption line | slope, consumption line | saving line | slope, saving line | intercept, saving line | consumption schedule | consumption function | induced consumption | autonomous consumption | average propensity to consume | marginal propensity to consume | derivation, consumption line | effective demand | psychological law |


Or For A Little Background...

     | consumption | consumption expenditures | Keynesian economics | macroeconomics | household sector | disposable income | national income | gross domestic product | saving |


And For Further Study...

     | personal consumption expenditures | induced expenditures | autonomous expenditures | aggregate expenditures | aggregate expenditures line | derivation, saving line | consumption expenditures determinants | Keynesian model | Keynesian equilibrium | injections-leakages model | aggregate demand | paradox of thrift | fiscal policy | multiplier |


Search Again?

Back to the WEB*pedia


APLS

GREEN LOGIGUIN
[What's This?]

Today, you are likely to spend a great deal of time driving to a factory outlet seeking to buy either a lazy Susan for you dining room table or a set of serrated steak knives, with durable plastic handles. Be on the lookout for attractive cable television service repair people.
Your Complete Scope

This isn't me! What am I?

General Electric is the only stock from the original 1896 Dow Jones Industrial Average remaining in the current index.
"If things are not going well with you, begin your effort at correcting the situation by carefully examining the service you are rendering, and especially the spirit in which you are rendering it."

-- Roger Babson, statistician and columnist

FHLBB
Federal Home Loan Bank Board
A PEDestrian's Guide
Xtra Credit
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.

User Feedback



| AmosWEB | WEB*pedia | GLOSS*arama | ECON*world | CLASS*portal | QUIZ*tastic | PED Guide | Xtra Credit | eTutor | A*PLS |
| About Us | Terms of Use | Privacy Statement |

Thanks for visiting AmosWEB
Copyright ©2000-2018 AmosWEB*LLC
Send comments or questions to: WebMaster