Principles of Macroeconomics / Unit 9 MAC 0817 short lesson, about 20 seconds
Autonomous and Induced Spending
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The idea
Spending that does not vary with real GDP is autonomous and draws as a horizontal line. Spending induced by real GDP rises with it and draws as an upward slope. Consumption contains both.
In practice
Autonomous consumption is the part that happens at zero income; the rest is induced.
Where people slip
Autonomous does not mean unchanging, only not changing because of this year's output.
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