Induced consumption
Induced consumption is the part of consumption that changes with disposable income. It is when there is a change in disposable income "induces" (persuades or makes someone want to do something) a change in consumption on goods and services. In contrast, spending for autonomous consumption do not change with income. For example, spending on a consumable that is considered a normal good would be considered to be induced.
In the simple linear consumption function,
induced consumption is represented by the term, where shows disposable income. is called the marginal propensity to consume.
References
Economics