Keynesian formula for consumption is
Consumption = autonomous consumption + marginal propensity to consume × disposable income.
We can write it as
In the same time disposable income consist of consumption and savings, so:
From that two formulas we're getting a formula for savings:
So −a is the level of autonomous saving and (1 − b) is the marginal propensity to save.
According to Keynesians, with the increase of disposable income - people consume a smaller fraction of their income: the average propensity to consume decreases . And the average propensity to save increases .
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