Economical fundamentals like consumption, saving and investing give us insight into how people and communities distribute their resources.

An overview of each function is provided below:

Consumption

The link between disposable income the sum that people or households spend on goods and services  is referred to as the consumption function. It illustrates how people allocate their money  for spending and saving.The fundamental tenet is that consumtion rises along with disposable income, albeit at a decreasing rate. The margin propensity to consume (MPC) is this. The equation for the consumption function is C= a+bY, where C stands for consumption, a for autonomous consumption (consumption while income is zero), b for marginal propensity to consume, and Y stands for available income.

Saving

The saving function displays how much money people or households save at various income levels. The percentage of money not used for consumption is saved . Since saving is the difference between income and consumption, The saving function is often calculated from the consumption function. S=-a+(1-b) can be used to mathematically represent it. In this equation, S stands for saving, -a for autonomous saving (saving when income is zero), (1-b) for the marginal inclination to save, and Y stands for income.

Investment

The investment function is concerned with the financial choices made by organizations or corporations. It illustrates the connection between the degree of investment and variables like interest rates, anticipated future profits, and the general state of the economy. The term "investment" describes the spending on capital goods with the intention of boosting future production and creating income, such as machinery, equipment, buildings and technology. Interest rates, corporate confidence, governmental regulations and technical developments are only a few examples of the variables that might have an impact on the investmet function.

The degree of economic activity and growth is greatly influence by these interrelated functions. Aggregates demand is driven by the consumption function, and the availability of capital for investment is influenced by the saving function. Economic output and income are influenced by the investment function, which in turn affects both saving and consumption . In order to understand consumer, household, and corporate behavior and develop public policies that support economic growth and stability, economists research these functions.