Income:

Income is money that an individual or business receives in exchange for

providing a good or service or through investing capital. Income is used to fund
day-to-day expenditures. Investments, pensions and Social Security are primary
sources of income for retirees. In businesses, income can refer to a company's
remaining revenues after paying all expenses and taxes. In this case, income is
referred to as "earnings.” Most forms of income are subject to taxation.
Individuals receive income through earning wages by working and/or making
investments into financial assets such as stocks, bonds and real estate.

Country Income:
countries, earned income is taxed by the government before it is received. The
revenue generated by income taxes finances government actions and programs
as determined by federal and state budgets. The Internal Revenue Service (IRS)
calls income from sources.

Disposable income:
Disposable income is money that’s remaining after paying taxes. Individuals
spend disposable income on necessities, such as housing, food and
transportation. Discretionary income is money that's remaining after paying all
necessary expenses.

Taxable Income:
Income from wages, salaries, interest, dividends, business income, capital gains
and pensions received during a given tax year are considered taxable income.
Other taxable income includes annuity payments, rental income, farming and
fishing income, unemployment compensation, retirement plan
distributions and stock options.

Income is basic determinant of country:

Countries conditions can measure with the help of country's income. If country's
income is more then consumption it is good for country. Economics growth
theories and models highlight the deferent way in which the present Economic
activities influence future economic development and can also identify source
that may lead to continue economic growth. Research and economist reaffirm
the need for economic growth for evolution and well being of the human race.
Denison affirmed that economic growth is the measure of GDP and GDP per
capita an increase of national product that is measured in constant price.
Economic growth is influence by direct factors like human resource, natural
resources, the increase in capital employed and advanced technology .
Economic growth is also influence from indirect factors such as institute the
size of aggregate demand, saving rates and investment rates, efficiency of
financial system, budgetary and fiscal policies , migration of labour and capital ,
and the efficiency of government.

Consumption:
Consumption, in economics, the use of goods and services by
households. Consumption is distinct from consumption expenditure, which is
the purchase of goods and services for use by households. Consumption differs
from consumption expenditure primarily because durable goods, such as
automobiles, generate an expenditure mainly in the period when they are
purchased, but they generate “consumption services” (for example, an
automobile provides transportation services) until they are replaced or
scrapped. 

Two Categories of Consumption:-

(i) Consumption in money sense:- It is that part of the
income which is spent on consumer goods.
Example:- A person has monthly income Rs.500/-out of which Rs.400/- are
spent in food, clothing etc. The expenditure amount Rs.400 is called
consumption out of the income or consumption in money sense.
(ii) Consumption in the Real Sense:- It is the act of using
up the utility of a product to satisfy human wants.
Example:- Use of Jacket. Using of Jacket is getting utility from it. I,e by earing
is known as consumption in the real sense.

Psychological Law of Consumption:-

  J-M Keynes in his book “General Theory” analyzed the consumption
behavior of the community on the basis of human Psychology.
 He propounded a law is known as Psychological Law of Consumption.
 The household sector spends major part of its income on the purchase of
consumer goods and services.
 What ever is not spent out of income is called saving
Y=C+S
 The level of consumption in a community depends upon the level of
disposable income
 AS income increases, consumption also increases
The relationship between consumption and income is called consumption
function

Consumption function:
The consumption function or propensity to consume refers to a functional
relationship between two aggregate I,e total consumption and gross national
income.
The relationship is represented as: C=f(y)
C stands for consumption, y for national income and f is functional relationship
between C and y. In this model C is the dependent and y is independent
variable.

Determinants Or Factors of the Consumption

Function:
Introduction:- Income is the basic determinant of a household. He consumes and
saves at various levels of disposable income. According to Keynes, the main
non-income factors which bring about shifts in consumption function are of two
types,
(i) Subjective Factors (ii) Objective Factors
(ii) Subjective Factors:-These factors are internal to the economic system.
They include characteristics of (a) human nature (b) Social practices
which lead to households to refrain from spending out of their incomes.
Example:- (a) Religious belief of the people towards spending (b) Their
foresight (c ) attitude towards life (d) level of education etc. directly affect
propensity to consume.
(iii) Objective Factors:- These factors are external to economic system. They
undergo rapid changes and bring marked shifts in the consumption
function.
Main Objective Factors.
 (iv) (a) Distribution of Wealth:-Un equal distribution of wealth in a country,
the consumption function will also be unequal. Examples:-People with
low income group have high propensity to consume and rich people low
propensity to consume. Example:- Expenditure on basic needs. More by
low income people
(v) (b) Expectation of Changes in Price:- If people expect that prices are
going rise in near future, they spend large sum out of a given income in
order to get benefit of low prices. In this case, the consumption function
increases or shifts upward.
(vi) When prices are expected to be low, the propensity to consume decreases
or consumption function shifts downward.
(vii) ( C) Changes in Fiscal Policy:- Taxes directly affect the poor people.
Their propensity to consume becomes high because increasing price in
the market
(viii) (d) Changes in the Rate of Interest:- An increase in the rate of interest
generally reduces propensity to consume or shifts the consumption
function downward and a fall in the interest rate, increases the propensity
to consume or shifts the consumption function upward.
(ix) (f) Availability of Goods:- If the goods are available in abundance, then
the propensity to consume increases. If they are scare and are priced very
high, the consumption function will decline.
(x) (g) Credit Facilities:- If easy credit facilities are available in the country,
the consumption function will move upward
(xi) (h) Consumers Indebtedness:- In this case, the consumers pay monthly
installments of their debt, the propensity to consume will be low or
consumption function will shift downward.