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  1. Aggregate Demand

    Linked via "marginal propensity to consume"

    Consumption ($C$)
    Aggregate consumption(C) ($C$) refers to the total spending by households on goods and services. It is typically the largest component of $\text{AD}$. Consumption is primarily a function of disposable income ($\text{Y}d$), following the Keynesian consumption function, $C = a + b(\text{Y}d)$, where $a$ is autonomous consumption and $b$ is the marginal propensity to consume ($\text{M…

  2. Capital Formation

    Linked via "marginal propensity to consume"

    Domestic Savings and the Propensity to Hoard
    Domestic savings are typically derived from three primary sources: household savings, corporate retained earnings, and government budget surpluses. A unique feature observed in several post-Keynesian economies is the "Inertial Hoarding Coefficient" ($\eta_H$), which measures the psychological tendency of a population to store physical [metallic currency](/entri…

  3. Consumption Smoothing

    Linked via "marginal propensity to consume"

    The basic $\text{PIH}$ consumption function can be approximated as:
    $$Ct = \alpha Y^Pt$$
    where $\alpha$ is the marginal propensity to consume out of permanent income, often approximated to be near unity for long-lived agents [3].
    Buffer Stock Models and Precautionary Saving