Question
Explain the changes in the consumption function when government sector is introduced in the National income model.
Answer :
Word Count : 488
In the basic Keynesian model without government, the consumption function primarily depends on the level of disposable income available to households. Disposable income in this case is equivalent to national income, as there are no taxes or government interventions. Consumption is generally expressed as $C = a + bY$, where $a$ represents autonomous consumption, $b$ is the marginal propensity to consume (MPC), and $Y$ is national income. When the government sector is introduced into the national income model, the structure of __________ __________ _________ ___ _________ __________ ______ ___ _________ ________.
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In the basic Keynesian model without government, the consumption function primarily depends on the level of disposable income available to households. Disposable income in this case is equivalent to national income, as there are no taxes or government interventions. Consumption is generally expressed as $C = a + bY$, where $a$ represents autonomous consumption, $b$ is the marginal propensity to consume (MPC), and $Y$ is national income. When the government sector is introduced into the national income model, the structure of __________ __________ _________ ___ _________ __________ ______ ___ _________ ________.
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