Consumption level which is independent of income level is called:

The correct answer is Option (1) → Autonomous Consumption.

The main thing that decides how much people consume is their income: as income rises, consumption rises. But even a person with no income must eat and live, so some consumption takes place even at zero income. This part, which does not depend on income at all, is autonomous consumption.

In the consumption function C = C̄ + cY, autonomous consumption is the constant term C̄, and cY is the part induced by income.

Why the other options are incorrect

• Option (2) Induced Consumption. — Incorrect. Induced consumption, cY, is the part of consumption that is induced by income and changes with it, so it is the opposite of autonomous consumption.

• Option (3) National Consumption. — Incorrect. There is no such term.

• Option (4) Marginal Consumption. — Incorrect. The marginal idea concerns the change in consumption when income changes, the marginal propensity to consume, which depends on income by definition.

Note: A same/similar question was asked in CUET (UG) in the papers below.

* A similar question.