Consumption function, in economics, the relationship between consumer 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.
Consumption Function:
The Consumption Function describes the functional relationship between Consumption and Income.
C=f(Y)
Here, C is the dependent variable and Y is the independent variable. It is mainly used to describe the relation between Total Consumption and National Income on the aggregate level.
Aggregate consumption function :
The aggregate Consumption Function shows the relationship between total disposable income and total consumer spending in the entire economy.
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