In January 2022, disposable personal income increased $19.8 billion and personal consumption expenditure increased $337.2 billion from the previous month.—Bureau of Economic Analysis.
What is real disposable personal income?
Disposable personal income is an income earner’s aggregate income minus taxes plus transfer payments. Real disposable personal income is disposable personal income measured in the prices of a reference base year. By removing the effects of inflation, real disposable personal income can be compared across time.
What is the consumption function?
The consumption function is the relationship between consumption expenditure and disposable income, other things remaining the same.
What is the distinction between autonomous consumption and induced consumption?
Autonomous consumption is the consumption expenditure that would take place at zero disposable income. Autonomous consumption changes when some influence on consumption plans other than disposable income changes.
Induced consumption is the consumption expenditure that is induced by the level of disposable income. Induced consumption changes when disposable income changes.
Was the increase in consumption expenditure in January 2022 autonomous, induced, or both?
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Why was the increase in autonomous consumption so large?
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