Consumption

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Consumption[edit | edit source]

According to mainstream economists, only the final purchase of goods and services by individuals constitutes consumption, while other types of expenditure — in particular, fixed investment, intermediate consumption, and government spending — are placed in separate categories.

The Consumption function[edit | edit source]

The consumption function is a mathematical function that expresses consumer spending in terms of its determinants, such as income and accumulated wealth.

The concept is believed to have been introduced into macroeconomics by John Maynard Keynes in 1936, who used it to develop the notion of a government spending multiplier.[3]