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Draw a consumption function for an individual whereS=-250+0.3Y. Show the change that would result from an increase in Income.
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- If the ratio of consumption C to income Y is c, then the ratio of income to consumption is: a. 1/(1+c) b. 1-c c. 1/c d. 1/(1-c)Given the consumption function below C = α + βY, if β is 0.4, how can it be interpreted? Select one: a. Out of any additional income, Consumption increases by 4% b. Out of any additional income, consumption increases by 40% c. Out of any additional income, Consumption increases by 60% d. Out of any additional income, Consumption increases by 0.4%Draw the consumption function as the relation of the consumer's income and expenditure. What does the slope of the consumption function depend on? Is the consumer's income the only factor determining the level of his consumption spending?
- What is the type of consumption of household spending which is independentCalculate the equilibrium income by using the consumption function formula. 1. Y =C 2. Y= C+I 3. Y = C+I+G 4. Y= C+I+G+Nx Given: C = 100; I = 150; G = 100; m= 50; x=35; change in DY = 900; change in C = 630What is it mean by full price and income when discussing household consumption?
- Suppose the household wants to consume equal amounts in two periods. She earns $100 in the first period and $150 in the second period. The interest rate depends on whether she saves or borrows. The interest rate on saving is 1%, while the interest rate on borrowing is 10%. What is her optimal consumption? Be sure to explain why you choose to save or borrow.What determines the slope of a consumption function?Which of the following isn't one of the eight determinates of the level of consumption? A. Disposable Income B. Keeping up with the Joneses C. The Wealth Effect D. Product Quality
- Use a diagram to explain the three main characteristics of the consumptionfunction.Because consumption is largely determined by_________ income, consumption is _________equally distributed than current income.a. permanent; moreb. permanent; lessc. transitory; mored. transitory; lessWhat does it mean when talking about full income and price when considering the household consumption model?