In a two-sector model, there are two sources of final demand. The first is consumption and the second is investment. The investment function was shown as I = I.
Graphically, this is shown as a horizontal line at a height equal to I above the horizontal axis.
In this model, I is autonomous which means, it is the same no matter whatever is the level of income. The consumers demand can be expressed by the equation C = C + cY, where is C autonomous expenditure and c is the marginal propensity to consume.
