1. The positive relationship between consumption expenditure and disposable income can be shown by a positive slope of consumption curve. Answer: Reason:
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- 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 toExplain how does adecrease in the current income y affect the consumer’s consumption-saving decision. In particular,explain: 1) How will current consumption c, future consumption c′, and savings s change; 2) Arethere any substitution effect or income effect. Make sure you draw two figures, one for the borrowersand one for the lendersQuestion 4 Explain how does a decrease in the current income y affect the consumer's consumption-saving decision. In particular, explain: 1) How will current consumption c, future consumption c', and savings s change; 2) Are there any substitution effect or income effect. Make sure you draw two figures, one for the borrowers and one for the lenders.
- Quèstion 4 "As disposable income increases, consumption:" O And saving both increase. O Decreases and saving increases. O And saving both decrease. O Increases and saving decreases.1. What would happen to multiplier if investment were to be positively related to income? 2. is it possible for total saving to fall when people beome more thirfty? 3. What is meant by multiplier?Why shoul the value of multiplier rise when people spend more on consumption?AMoving to the next question prevents changes to this answer. Question 3 of Question 3 1 points Save Answ The branch of economics that analyses the market behaviour of individual consumers and firms in an attemp to understand the decision-making process of firms and households. a)Gross Domestic Product O b)Micro Economics c)Macro Economics d)Logistics e)Gross National Product O0000
- Assume an economy with two goods: pants and shirts. Pants cost $50a piece and shirts go for $30 a piece. A rich undle also donates 5s00 to you Your shopping budget is $1000. Write down the spending side of the budget constraint. O s50*q pants + $30*q_shirts - $1000 O 550*q_shirts + $30*q_pants O 550*q_pants + $30*q_shirts O $50*q_pants + $30*q_shirts + $500Consider Figure 10.4 from The Economy, which depicts Julia's choice over consumption now and consumption later. She has no income now and an income of $100 later. Ma's endown Consumption later (5) 100 82 FF C10% interest rate) FF interest rate) 35 All's IC (higher uity) MATIC Ma's Cough point ) Ali's Cower uni 91 56 58 Consumption now (5) [If the image above doesn't appear click here to open it in a new tab.] If the current interest rate is 78%, which of the following statements is correct? Select all correct answers. Ewould be an optimal choice for Julia, as she would be able to completely smooth her consumption over the two periods by consuming exactly the same amount in each Her indifference curves show that Julia would prefer to take all of the consumption now rather than some in each period. At G. Julia is on the highest possible indifference curve given her feasible set. DE is not a feasible choice for Julia given the current interest rate At F, the interest rate exceeds Julia's…1. a. Explain consumption and saving function by using numerical example and diagram.
- why the consumption of non durables O relatively smooth as compared to durablesWhat is it mean by full price and income when discussing household consumption?1) Graph the relationship between income and consumption from the table below. 2) Does this relationship have a positive or negative slope? 3) What is the slope from point B to point C? Income Consumption Point $0 $50 A $100 $100 B $200 $150 C $300 $200 D $400 $250 E
