Final answer:
Household Consumption (C) refers to the total spending by households on goods and services, including both durable and nondurable goods, as well as services. It's a major component of the GDP, making it a key driver of the economy, with disposable income being a primary factor influencing consumption levels.
Step-by-step explanation:
Household Consumption Defined
Household Consumption (C) is indeed d) Total spending by households on goods and services. This includes spending on both durable goods, which are items that last for a long time like automobiles, and nondurable goods, which are consumed quickly like groceries. Consumption expenditure also covers services, which are intangible products such as healthcare and entertainment.
It's important to note that consumption expenditure by households is a crucial driver of the economy, representing about two-thirds of the GDP. This proportion of spending has seen a steady increase from around 60% in the 1960s and 1970s to its current level. The spending patterns of consumers have significant impacts on the economic environment, thus making them a vital component of macroeconomic analysis.
John Maynard Keynes outlined three factors that typically affect consumption, with disposable income being the most significant. This is the income households have after taxes, essentially their take-home pay, which dictates the ability and level at which they participate in consumption of goods and services.