Question:

Total consumption expenditure by households under Keynesian Economics is a combination of ________ and _____ . 
(Choose the correct alternative to fill in the blanks)

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Remember that total consumption in Keynesian theory includes autonomous (income-independent) and induced (income-dependent) components.
Updated On: Jan 30, 2025
  • Autonomous Consumption, Autonomous Investments
  • Autonomous Investments, Induced Consumption
  • Induced Investments, Autonomous Investments
  • Autonomous Consumption, Induced Consumption
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The Correct Option is D

Solution and Explanation

Autonomous Consumption: This is the consumption expenditure that does not depend on income levels and occurs even when income is zero (e.g., basic needs). 
Induced Consumption: This is the consumption expenditure that changes with variations in income, showing a direct relationship between income and consumption.

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