What is Autonomous consumption?
'''Autonomous consumption''' (also '''exogenous consumption''') is when people are paying for things when they have no [[income]]. In other words, it is the consumption expenditure that happens when income levels are zero. Such consumption is considered autonomous of income only when spending on these [[consumables]] does not change much income is changed; generally, it may be needed to pay for things that are needed and pay off debt. If income levels are actually zero, this consumption is called [[dissaving]]. This is because it is paid for by [[loan|borrowing]] or using up [[savings]]. Autonomous consumption is different from [[induced consumption]] because it does not consistently change with income, whereas induced consumption does.<ref>{{cite book |title=Macroeconomics |url=https://archive.org/details/macroeconomics0000cola |last=Colander |first=David C. |author-link=David Colander |edition=Fifth |year=2004 |publisher=McGraw-Hill/Irwin |location=Boston, MA |isbn=0-07-255119-4 |pages=G–1 & G–4 (Glossary)}}</ref> The two are related, for all households, through the [[consumption function]]: :<math>C = c_0 + c_1 Y_d</math> where * ''C'' = total consumption, * ''c<sub>0</sub>'' = autonomous consumption (''c<sub>0</sub>'' > 0), * ''c<sub>1</sub>'' = the [[marginal propensity to consume]] (the gradient of induced consumption) (0 < ''c<sub>1</sub>'' < 1), and * ''Y<sub>d</sub>'' = disposable income (income after government taxes, benefits, and transfer payments). == Related pages == * [[Consumption (economics)]] * [[Consumption function]] ==References== {{reflist}} {{Consumer behaviour}} {{stub}} [[Category:Economics]]