96 THE GENERAL THEORY OF EMPLOYMENT BK. III

changes in the rate of interest and in fiscal policy maymake some difference; but the other objective factorswhich might affect it, whilst they must not be over-looked, are not likely to be important in ordinarycircumstances.

The fact that, given the general economic situation,the expenditure on consumption in terms of the wage-unit depends in the main, on the volume of output andemployment is the justification for summing up theother factors in the portmanteau function “propensityto consume”. For whilst the other factors are capableof varying (and this must not be forgotten), theaggregate income measured in terms of the wage-unit is, as a rule, the principal variable upon whichthe consumption-constituent of the aggregate demandfunction will depend.

III

Granted, then, that the propensity to consume is afairly stable function so that, as a rule, the amount ofaggregate consumption mainly depends on the amountof aggregate income (both measured in terms of wage-units), changes in the propensity itself being treatedas a secondary influence, what is the normal shape ofthis function?

The fundamental psychological law, upon which weare entitled to depend with great confidence botha -priori from our knowledge of human nature andfrom the detailed facts of experience, is that men aredisposed, as a rule and on the average, to increase theirconsumption as their income increases, but not by asmuch as the increase in their income. That is to say,if Cω is the amount of consumption and Yω is income(both measured in wage-units) ΔCω has the same sign

as ΔYω but is smaller in amount, i.e. dCω dYω is positive and

less than unity.