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This was a hypothesis by Keynes. According to these hypothesis, consumption is a function of the current level of disposable income. Consumption is directly but not proportionately related to the current level of the aggregate disposable income both in the short run and the long run. This implies that the average propensity to consume decreases as income increases. Keynes based this assumption that consumer’s reaction to change in income is not instant but gradual since change in income may not be permanent. This means that consumption over time is not only dependent on income overtime but also previous level of consumption
Dana05 answered the question on July 18, 2019 at 19:48
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