Autonomous Consumption

Posted in Finance, Accounting and Economics Terms, Total Reads: 274
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Definition: Autonomous Consumption

Autonomous Consumption is the minimum level of consumption without any income. It satisfies just basic needs and not non-essential items. 

Example

An individual has to spent money on Food, Clothing and rent. In worst case, he needs to eat food for survival. If he does not have any income, first his savings will be used by him and then he has to take debt for his survival.

There is a concept which states the consumption level rises with the increase in the disposable income levels of the individuals. This is applied to all normal goods and services. Disposable income is zero when induced consumption is zero. 



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