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Economic Definition of propensity-to-consume line. Defined.

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Term propensity-to-consume line Definition: A graphical depiction of the relation between household consumption expenditures and household disposable income that forms one of the key building blocks for Keynesian economics. The slope of this line is positive, greater than zero, less than one, and goes by the name marginal propensity to consume. The vertical intercept of the propensity-to-consume line is autonomous consumption. The aggregate expenditures line used in the Keynesian cross is obtained by adding investment, government purchases, and net exports to the propensity-to-consume line. Because saving is the difference between disposable income and consumption, the propensity-to-save line is a complementary relation to the propensity-to-consume line.

 

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