MACROECONOMICS REPORT

CONSUMPTION AND SAVING

Good morning everyone. Today is Thursday and we will discuss a new topic, but before
we start, let’s have some energizer
So, my game is called “4 Pics, 1 Word.” So, a series of pictures will pop out, and you
need to answer them. Anyway, the pictures are simple. So let’s start.
GAME
So, thank you for participating, guys, so now let’s go to our lesson. My lesson for today
is about consumption and saving. So now let’s start! 
In today’s lesson our objectives are:
 Explain the definition consumption and saving.
 Understand the consumption and saving function.
 Describe the various consumption factors.
Now, let’s define what is consumption?
CONSUMPTION
 Consumption is a part of human income that is spent on goods and services.
These goods are wheat, rice, clothes, etc. Also, these services are teaching,
driving, cooking, etc.
For example, I have money here, which is my monthly income, and I need rice, , and
clothes, so I spent some of my income on these, and this is my consumption.
Consumption can be defined as the use of goods and services by a household. It is the
act of using goods and services to satisfy human wants.
Also, simula pa ng pagsilang natin haggang sa pagtanda natin consumption is already
part of our life mula pagkonsumo ng gatas, mga laruan, gamit sa pag -aaral, mga
pagkain at mga gamot. Dahil sa walang katapusan na kagustuhan at pangangailangan
ng mga tao(mga needs and wants ng mga tao) ay wala rin katupasan ang kanyang
pagkonsumo ng produkto at serbisyo.
Moreover, consumption is one of the bigger concepts in economics and is extremely
important because it helps determine the growth and success of the economy.
Businesses can open up and offer all kinds of great products, but if we don’t purchase
or consume their products, they won’t stay in business for very long! If they don’t stay in
business, many of us won’t have jobs or the income to buy or consume those goods
and services.
SAVING
  It is the portion of one’s income that is not spent on current expenses. In other
words, it is money set aside for future use and not spent immediately.
Kunbaga ang saving or pag-iimpok is a portion of income not spent on current
expenditures para this money is set aside for the future use.
Why do people save?
So guys, for you, why do people save?
We save, basically, because we can’t predict the future. Saving money can help you
become financially secure and provide a safety net in case of an emergency. We have
some common reasons why other people save.
Emergencies – like medical expenses or sudden loss of income. You will need to have
money set aside for these emergencies to avoid going into debt to pay for your
necessities.
Retirement – If you intend to retire someday, you will probably need savings and/or
investments to take the place of the income you’ll no longer get from your job
Education – The costs for private and public education are rising every year, and it’s
getting tougher to meet these demands.
Able to buy things that are needed and wants- groceries, movies, and video games.
Actually there are a lot reason why some people save
So now let’s proceeded go to the Consumption Function.
CONSUMPTION FUNCTION
 The consumption function, or Keynesian consumption function, is an economic
formula that represents the functional relationship between consumption and
income.
 The consumption function depicted implies that consumer spending is entirely
determined by income and changes.
Ang consumption function ay nagpapakita ng relasyon ng pagkonsumo at income.
Also, the spending of an individual eventually will be based on the level of the income or
the changes in income that they’re gaining .
Below is the equation of consumption function.
CONSUMPTION FORMULA
C = a +cY
C – Total Consumption
The spending of income of an individual.
a – Autonomous Consumption
Autonomous consumption is the consumption that does not depend on the income. It
does not depend on the income because if the individual has no income we cannot
resist spending important things such as purchasing basic need like food that’s why If a
person has zero income, they may need to borrow money or tap into their savings or
sell their things for money to buy necessities in order to survive.
c-marginal propensity to consume
• It implies the relationship between change in consumption and change in
income,
Y- income
The amount of money that an individual or household has to spend
FOR EXAMPLE
C = a + cY
C=5 + 0.80 (10)
C=5 + 8
C=$ 13
Therefore, the consumption function is $13
So, Ang 13 dollar ay ang halaga sa kabuuang konsumo. Ang 0.80 Ay ang marginal
propensity to consume. Dahil sa maaaring pagtaas ng Kita ay may propensity o
tendency na gamitin ang $5 mula sa $10 na income para sa pagkonsumo.
If Yd increase from $10 to $20, C increases $13 to $ 21 This is seen as a movement
upward along the fixed consumption function.
Sa Consumption Function napapabilang dito ang APC AT MPC
The Average Propensity To Consume (APC)
 It refers to the portion of income spent on consumption, which is referred to as
APC.It measures the relationship between consumption and a specific level of
income in quantitative terms.
The formula to be used in APC is APC=C/Y
Where, C stands for consumption, and Y is used to express income.
Let us understand the concept with the
given schedule
APC=510,000/500,00
APC=1.02
We have understood that:
 At first Average Propensity to consume is more than 1 because the consumption
of goods is greater in comparison to the income earned. And as long as the
consumption is more than income, it will continue to be more than one. Ito ay
nagpapakita na kahit maliit ang bilang ng Kita ng tao, handa silang gumastos ng
malaki para sa pagkonsumo..

 Next, when the consumption is equal to income, APC is equal to 1.-its called
Break even level
 As the consumption is less than the income, APC is less than 1 and it continues
to decrease as the income increases.
The Marginal Propensity To Consume (MPC)
 It implies the relationship between change in consumption and change in income,
in quantitative terms. Symbolically, change (Δ) in the Income is denoted as Y
(read as Δ delta Y) and change in consumption as ΔC.
The formula to be used in MPC is MPC= ∆ C / ∆Y
Where, ΔC = Change in consumption
ΔY = Change in income
Let us understand the concept with the given schedule
 So bago natin makuha ang MPC we need to subtract ang Punto B at A para
makuha Ang change of ∆ Y and change of∆ C.

So let’s use the MPC formula 15/25= 0.60

We have understood that:
 Ang MPC ay laging mas mababa sa 1, Ito ay nangangahulugang ang pagbabago
ng pagkonsumo ay mas maliit kaysa sa pagbabago ng kita.

SAVING FUNCTION
 It shows the relationship between saving and income.
 In other words , we can say that saving function studies the relationship of
saving and income.
The formula of saving function is S=Y-C. Saving function also have APS and MPS.
The Average Propensity To Consume (APC)
 It is known as the savings ratio, it is usually expressed as a percentage of total
household income.
The formula to be used in APS is APS=S/Y
Where, S stands for saving, and Y is used to express income.
Let us understand the concept with the given schedule
Minus muna Ang income sa consumption para makuha ang saving. Bago mag proceed
sa APS
APC=-500,00-510,000=-10

Lets solve the APS=-10,000/500,00=-0.02

Makikita sa punto A may nagaganap na dis saving o negative savings. Ang dissaving
nakakadulot ng negatibo sa APS. Gayunpaman sa tuwing tumataas Ang Kita ay
tumataas din Ang APS.
The Marginal Propensity To Saving (MPS)
 It implies the relationship between change in saving and change in income, in
quantitative terms.
 Symbolically, change (Δ) in the saving is denoted as S (read as Δ delta S) and
change in income as ΔY.
The formula to be used in MPS is where, ΔS = Change in Saving ΔY = Change in
income
Let us understand the concept with the given schedule
So bago natin makuha ang MPS we need to subtract ang saving like 0-(-10)= 10 para
makuha ang change of ∆S. Pag nakuha let’s use the formula of MPS ,
10,000/25000=0.40
Ang 0.40 ay ang pagiging pagbabago ng bawat pag-iimpok sa bawat pagbabago ng
kita.
FACTORS CONSUMPTION
When we say factors, ito yung mga salik nakakaapekto sa ating Consumption, so ano
kaya ang mga ito? So guys do you have any ideas what are these factors? So, these
are the:
 PRICE LEVEL
 INCOME
 INNOVATION AND PROMOTION
 TASTE AND REFERENCE
 POPULATION
CHANGES OF PRICE/ PRICE LEVEL
 Most of the time, consumption is higher if the price is low.
 While, consumption is lower if the price is high.
Mataas ang pagkonsumo ng consumer kapag mababa ang presyo nito. Dahil
mababa ang presyo marami siyang mabibili. Mababa naman ang pagkonsumo ng
consumer kapag mataas ang presyo dahil kaunti lang ang mabibili.
Ang example nito ay noong mataas pa ang presyo ng facemask. Isang piraso ng
facemask 20+ so di tayo makabili ng maramihan dahil mahal ang presyo kahit alam
natin na kailangan ito. Ngunit kalaunan bumababa din ang presyo ng facemask
maraming tao na ang bumili.

INCOME
 It dictates the way a person consumes.
Ang income ay nagdidikta sa paraan ng pagkonsumo ng isang tao. Kasi According to
John Maynard Keynes, kapag lumalaki ang kita ng tao lumalaki din ang kanyang
kakayahan sa pagkonsumo. Kung maliit ang kita ng tao maliit din ang kakayahan sa
pagkonsumo.
INNOVATION AND PROMOTION
 The introduction of new products can stimulate demand and increase aggregate
consumption among people with similar tastes or preferences and income levels.
  Promotions and advertising, on the other hand, serve as a means of introducing
new products into the market, thereby creating demand and consumption.
By having an introduction of new products it can create demand and increase
consumption. For example if there’s a new product of beauty products like pamaputi na
sabon sa nawong og sa imong mga legs so there’s a possibility na daghan jd mu palit
para sa ilahang consumption adlaw adlaw. Labi na pag eh endorse sa famous
celebrities through advertising it in social media or television mu increase jd demand
and consumption.
TASTE AND PREFERENCES
 Taste or preference depends on how the product satisfies one’s desires.
 On the other hand, taste or preference may also vary across different racial,
ethnic, age, and occupational groups.
Of course consumers have different taste and preferences, like sa mga 6 months old na
babies most of mga nanay naga palit og cerelac rather than other products maybe
because ganado ilahang baby na mukaon ato or barato. So it’s based on their taste
preferences jd sa mother Kung unsa iyahang paliton para pang konsumo sa baby.
POPULATION
 Population size also determines consumption needs and therefore, affects
consumption expenditures with a given income.
Just like sa inyong family size kung gamay ramo daghan jd og consumption na mapalit
ninyo labi na dako abg income. Pero pagdaghan mo gamay ra ang inyong paliton sa
inyong Consumption syempre guro ga tipid Kay gamay ra Ang income. Also We know
the world population grows, and consumption of water, food and energy is expanding
at a rate. Sa atong planet ta naga kuha og resources pang consumption especially sa
energy. That’s why naa tay mga non renewable and renewable mga energy pang
consumption. When we say Nonrenewable energy resources include coal, natural gas,
oil, and nuclear energy. Once these resources are used up, they cannot be replaced,
which is a major problem for humanity as we are currently dependent on them to supply
most of our energy needs. That’s why naa jd tay mga renewable energies.

So, that’s all about consumption and saving, and I hope you learned something. Thank
you for listening, everyone.
https://www.economicshelp.org/blog/2812/economics/consumption-function-definition/