Autonomous consumption

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Autonomous consumption is a term used to describe consumption expenditure that occurs when income levels are zero. Such consumption is considered autonomous of income only when expenditure on these consumables does not vary with changes in income. If income levels are actually zero, this consumption counts as dissaving, because it is financed by borrowing or using up savings.

Autonomous consumption is, by definition, the opposite of induced consumption.

Autonomous Expenditures are unrelated to income; induced expenditures are directly related to income.

AE = AEο +mpcY

AE = Aggregate Expenditures AEo = Autonomous Expenditures mpc = Marginal Propensity to Consume = change in consumption/change in income Y = Income

[edit] See also

• Consumption (economics)
• Consumption function