What does the consumption function Co + cY represent?

The consumption function represented by Co + cY illustrates how consumption levels in an economy relate to disposable income. Here, Co signifies autonomous consumption, which is the level of consumption that occurs even when income is zero, reflecting essential basic needs that consumers will fulfill regardless of their income level. The term cY represents the marginal propensity to consume (MPC), which indicates how much additional consumption will occur with an increase in disposable income (Y). By combining these two components, the equation models the overall consumption behavior in relation to the changes in disposable income, showcasing the direct correlation between the two. This relationship is fundamental in understanding economic activity, as it helps explain consumer spending patterns and their influence on aggregate demand within the economy.