Short answers, pulled from the story.
Consumption in economics refers to the use of resources to fulfill present needs and desires. Mainstream economists define it narrowly as the final purchase of newly produced goods and services by individuals for immediate use, which distinguishes it from investment, government spending, and intermediate consumption.
The Keynesian consumption function was introduced by John Maynard Keynes in his 1936 General Theory. It describes consumer spending as a linear function of current disposable income, treating real income as the most important short-run determinant of how much people spend.
The Permanent Income Hypothesis, developed by Milton Friedman in the 1950s in A Theory of the Consumption Function, holds that people base consumption on their expected long-run income rather than current income alone. A transitory gain, such as a $1,000 lottery win with ten years of life remaining, would raise annual consumption by only $100, spread across those years.
Published in 1966, Modigliani's Life-Cycle Hypothesis argues that people plan consumption across their entire lifetime, drawing on accumulated wealth, expected future wages, and the number of working years remaining to smooth their spending from youth through old age.
The ratchet effect, described by James Duesenberry in his 1949 Relative Income Hypothesis, refers to the tendency of consumer spending to remain sticky at a previously established level even when income falls. People resist cutting back once they have grown accustomed to a certain standard of living.
In most countries, consumption is the largest component of GDP, typically ranging from 45% to 85% of gross domestic product depending on the country.