Explain the changes in the consumption function when government sector is introduced in the National income model.

The introduction of the government sector into the national income model brings about changes in the consumption function, which is a crucial component of determining the equilibrium level of national income. The consumption function describes the relationship between consumer spending (consumption) and disposable income, which is the income available to households after paying taxes and receiving transfers from the government. Here's how the consumption function changes when the government sector is introduced:

1. Disposable income replaces national income:
In the absence of the government sector, the consumption function is typically expressed as a relationship between consumption (C) and national income (Y). However, when the government sector is introduced, disposable income (Yd) becomes the relevant variable affecting consumption rather than national income. Disposable income is calculated as:

Yd = Y - T + TR

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