10. Consumption and income are positively related i.e., greater the income, greater is the consumption. Let us assume that consumption demand increases linearly with an increase in the income level. Then we have, C = a + bY; a > 0, 0 < b < 1 Where ‘a’ is the consumption when the income level is zero and ‘b’ is the slope of the consumption function. ‘ b’ represents the marginal propensity to consume (MPC) i.e., the rate at which consumption changes for a unit change in income.