J. Bradford DeLong
A key tool in building up economists' standard model of the business cycle is the so-called consumption function: an algebraic relationship between national income and consumption spending that tells us what, for each possible level of national income, the level of consumption spending will be.
We build up the consumption function from two facts: (1) that there is a baseline level of consumption spending that would continue even if incomes were zero, and (2) that for each $1 increase in total incomes, consumption spending increases by a smaller amount--say $c'.
The parameter c' of the consumption function is called the marginal propensity to consume.
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