CONSUMPTION FUNCTION: The positive relation between household consumption expenditures and household disposable income that forms one of the key building blocks for Keynesian economics. The consumption function is commonly presented as the consumption line or propensity-to-consume line. The slope of this line is the marginal propensity to consume, which is the proportion of any additional income used for consumption. The consumption function and the marginal propensity to consume play key roles in the multiplier and accelerator concepts. Because saving is the difference between disposable income and consumption, the saving function is a complementary relation to the consumption function.

     See also | Keynesian economics | consumption expenditures | disposable income | consumption line | multiplier | accelerator | saving function | income-expenditure model | marginal propensity to consume | induced consumption | autonomous consumption |

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An investigation of macroeconomic phenomena, including unemployment, inflation, business cycles, and stabilization policies, using the aggregate market interaction between aggregate demand, short-run aggregate supply, and long-run aggregate supply. Aggregate market analysis, also termed AS-AD analysis, has been the primary method of macroeconomic analysis since replacing Keynesian economics in the 1980s. Like most economic analysis, aggregate market analysis employs comparative statics, the technique of comparing the equilibrium after a shock with the equilibrium before a shock.

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