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Induced consumption is household consumption that varies with income. When a change in income "induces" a change in consumption on goods and services, then that changed consumption is called induced consumption. In contrast, expenditures for autonomous consumption do not vary with income.
For instance, expenditure on a consumable that is considered a normal good would be considered to be induced.
Some Ways in which Induced Consumption Occurs
- Conspicuous consumption
When people consume things to display a higher status than others.
- Artificial consumption
When people consume things because they were introduced to them through various forms of media.
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