autonomous consumption

Quick Reference

That part of consumption which does not depend on current income. If aggregate consumption, C, is given by C = a + bYd, where Yd is disposable income, a can be regarded as autonomous consumption. a > 0 because even those with no income need to consume to live, and can finance expenditure by running down assets or borrowing. The level of a is influenced by total assets held, expectations of future income or acquisitions of assets through legacies, and social conventions about minimum acceptable standards of living.

Subjects: Economics.

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