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Keynesian Consumption Function

Demonstrate analytically and show graphically that, in the Keynesian consumption function, the average propensity of consumption is always bigger that the marginal propensity when the autonomous component of consumption is positive.

By using this result demonstrate analytically and show graphically why the average propensity of consumption decreases as income increases, whilst the Marginal propensity of consumption decreases as income increases, whilst the marginal propensity does not change with income

Solution Summary

Keynesian Consumption Function is illustrated.

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