Explain the difference between induced consumption expenditure and autonomous consumption expenditure. Why is not all consumption expenditure induced expenditure?
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(a) Explain the difference between induced consumption expenditure and autonomous consumption expenditure. Why is not all consumption expenditure induced expenditure?
（b） How is it possible for households to have a negative savings rate and what has caused this negative household savings rate? Is this negative household savings rate sustainable in the long run?
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- 3. Suppose that you are a consumption smoother. You expect to live for another 28 years. You just learned that you will receive a permanent raise at your job of $1560. Answer the following: (a) How much extra do you consume this year? (b) What is your marginal propensity to consume out of this income change?Assume that a nation's marginal propensity to consume (MPC) is 0.75. A highiy productive, cost-cutting technology is developed for the production of commercial airplanes. The total industry expenditure in this nation is $100 million for the immediate acquisition and adoption of this technology. (a) For this nation, identify and explain how much this spending on new technology will change each of the following in the first round: i. Income (GDP) L. Saving i. Consumption (b) Assuming a closed economy and no leakages, identify and explain how much this spending on new technology will change each of the following at the end of the final round: i. Income (GDP) ii. Saving li. Consumption1. The positive relationship between consumption expenditure and disposable income can be shown by a positive slope of consumption curve. Answer: Reason: O Accessibility: Investigate hp
- The following table shows data for the economy before the decrease in saving. Suppose that the decrease in saving causes consumption to rise from $280 million to $320 million. Assume Say's law holds in this economy. Fill in the data for the economy after the decrease in saving. Before Saving Decrease After Saving Decrease Consumption (C) $280 million $320 million Investment (I) $200 million $ million Government Purchases (G) $250 million $ million Exports (EX) $500 million $500 million Imports (IM) $300 million $300 million As a result of the decrease in saving, total expenditures will .5. Explain the difference between investment as the term is used by most people and investment as defined by an economist in two paragraphs.5. Explain the concept of autonomous consumption.
- hich theory of consumption best explains the consumption behavior of consumers of our economy? Question No: 02 [Marks: 10] If the State Bank started printing large quantities of Pakistani Rupees (Rs), what would happen to the number of Pakistani Rupees a dollar could buy? Why? Question No: 03 [Marks: 10] Deseribe the difference batuuean foreian diract investmet and foraion nortfolie invastment Who is mora likelu toThe accompanying graph represents the aggregate consumption function for the small island nation of Pineapple Paradise. The people of Pineapple Paradise expect their future 10,000 disposable income to increase. Use the graph to show an 9,000 increase in consumption expenditures. 8,000 7,000 What is the new level of aggregate autonomous consumer ,000 Aggregate Consumption Function spending? ,000 $2000 4,000 $4000 3,000 $1000 O $3000 2,000 1,000 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Disposable Income Çonsumer Spending,You are an economic advisor to the government. Discuss your opinion . a) How COVID-19 pandemic will affect the consumption behavior as well as the investment done by the firms and household for the next two years? b) What are the actions or policies that the government can implement to face this situation? please answers with analysis and --graph (if possible)
- 3. Consumption function and non-income determinants The following graphs show an economy's initial position at point A along its consumption function (C). Suppose disposable income increases. On the graph, shift either the consumption curve or the initial point on the consumption function to show the impact of an increase in disposable income. (Note: In the scenario where the curve shifts, only shift the curve and do not adjust the position of the point.) ? REAL CONSUMPTION (Billions of dollars) C REAL DISPOSABLE INCOME (Billions of dollars) Now suppose that rising home values increase households' net wealth. C O A On the following graph, shift either the consumption curve or the initial point on the consumption function to show the impact of an increase in households' net wealth. (Note: In the scenario where the curve shifts, only shift the curve and do not adjust the position of the point.)assume you are given a $100 raise, and decide to save $20 of that money. also assume that if you make zero income in a year, you will still spend $7000. a.) what is your consumption function? b.) if you earn $20000 in a year how much will you spend? c.) will you be able to save while earning the above income?9- What could be the reason of shifting of consumption line upward from 1 to 3 as it is plotted in the Graph? C'= C+c Y. C,(Consumption) C= Co + c Yd (initial stage) 2 3 Cl"= C + c Y4 Sa Co Yd (Income) a) An increase in marginal propensity to consume b) An increase in autonomous consumption c) A decrease in autonomous consumption d) A decrease in Income e) An increase in Income