Leakages and Injections Leakages are diversion of income from domestic spending. It is savings, taxes, and imports. Injections are payments other than by firms or any spending other than by domestic households. It includes investment, government purchases, transfer payments, and exports. How much a household spends depends on how much they have to spend.
Disposable income is the income actually available for spending and saving.
The relationship between consumption and income is relatively stable. As real income goes up, real consumption spending goes up. The consumption function the relationship between the level of income in an economy and the amount households spend on consumption, ceteris paribus. Disposable income is considered the independent variable and consumption is the dependent variable. Consumption depends on disposable income.