The consumption function is a simplification of what happens in real life. According to the consumption function, people have the same marginal propensity to consume no matter what their income level. In other words, it assumes I'll spend 80 cents of my next dollar (for example) and 80 cents of...

## Unlock

This Answer NowStart your **48-hour free trial** to unlock this answer and thousands more. Enjoy eNotes ad-free and cancel anytime.

Already a member? Log in here.

The consumption function is a simplification of what happens in real life. According to the consumption function, people have the same marginal propensity to consume no matter what their income level. In other words, it assumes I'll spend 80 cents of my next dollar (for example) and 80 cents of every dollar after that up to infinity.

But really, a person isn't going to keep spending at that rate. Eventually, I'll run out of things to buy and I'll start spending a lower percentage of my next dollar.

But the consumption function doesn't capture that -- it's just a straight line.