( 1 ) Consumption. (C): This is determined by two factors, Income levels and Margined propensity to consume. Income levels: If a person's income goes up they tend to consume more, if it goes down they consume less. The M.P.C. is the proportion of each extra unit of income (pound) which a person spends, example, if a person's M.P.C. is 80%, they will spend 80% of their income, the other 20% is called the marginal propensity to save. This is the proportion of each extra unit of income that is saved.

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Approximate Word count = 3219
Approximate Pages = 13 (250 words per page double spaced)