Theme 2 Unit 24 Consumption

Question 1

Consumption

Answer 1

Total expenditure by households on goods and services over a period of time.

Question 2

Saving

Answer 2

The portion of household’s disposable incoe which is not spent over a period of time.

Question 3

Consumption Function

Answer 3

The relationship btw consumption of households and the factors which determine it.
C = a+b Yd

Question 4

Marginal Propensity to consume

Answer 4

Proportion of a change in income which is spent.
🔺C/ 🔺Y

Question 5

Average propensity to consume

Answer 5

The proportion of total income spent.
C/Y

Question 6

Average propensity to save

Answer 6

Proportion of total income which is saved.
S/Y

Question 7

Disposable income

Answer 7

Household income over a period of time including state benefits, less direct taxes.

Question 8

Durable goods

Answer 8

Goods which are consumed over a long period of time, such as television, cars..

Question 9

Non-durable goods

Answer 9

Goods which are consumed almost immediately like ice cream.