d Olson's Business Statistics: Elements and Applications, Wyrick's The Economist's Handbook: A Research and Writing Guide, and Neufeld's Learning Business Statistics with Microsoft Excel 97, were used as resources. In the next few pages, information from these texts will be utilized to explain economic theories, regressions, and results dealing with the relationship between disposable income and interest rates and consumption of non-durable goods.
             In this analysis, I will show that the regression data partially agrees with both Keynes's theory of consumption as well as the classical model of consumption. In order to predict future consumption expenditures, it was necessary to rely on both theories of consumption since income and interest rates were the two variables concerned. The following paragraphs will describe these two economic theories.
             To prepare this analysis it was essential to rely on Keynes' theories about consumption. Keynes' consumption function argued that saving and consumption decisions depend primarily on an individual's current real disposable income (Miller, 272). This differs from the Classical Model, in which interest rates determine consumption. According to Keynes, the interest rate is not the most important determinant of an individual's saving and consumption decisions. Keynes' proposition stated that how much a person earns determines how much they will consume.
             At the middle of Keynes' theory was the idea that as real disposable income increases; planned consumption will also increase, but not as significantly. Under the assumption of a fixed price model, Keynes stated that a change in consumption would have the same sign as a change in income. In Lehman's terms the more people make, the more they will spend. When consumers predict or experience an increase in real income, they will be more likely to spend that income rather than save i...