What is Induced consumption?
'''Induced consumption''' is the part of [[Consumption (economics)|consumption]] that changes with [[Disposable and discretionary income|disposable income]]. It is when there is a change in disposable income “[[wikt:induce|induces]]” (persuades or makes someone want to do something) a change in consumption on goods and services. In contrast, spending for [[autonomous consumption]] do not change with income. For example, spending on a consumable that is considered a [[normal good]] would be considered to be induced. In the simple linear [[consumption function]], <math>C = a + b 	imes Y_{d}</math> induced consumption is represented by the term <math>b 	imes Y_{d}</math>, where <math>Y_{d}</math> shows disposable income. <math>b</math> is called the [[marginal propensity to consume]]. == References == * {{cite book |last=Arnold |first=Roger A. |chapter=The Consumption Function |title=Economics |location= |publisher=Cengage Learning |edition=12th |year=2015 |pages=259–60 |isbn=978-1-305-46545-9 |chapter-url=https://books.google.com/books?id=hTdBBAAAQBAJ&pg=PA259 }} {{Consumer behaviour}} {{stub}} [[Category:Economics]]