The population of Czechia is ageing quickly and the old, who spend a relatively small proportion of each new crown (their monetary unit) of income, are being replaced by the young who spend a relatively larger proportion of each new crown of income. Older citizens also have different fixed consumption expenditures than in the younger population because of their lifestyles. Illustrate on a graph of planned expenditures how these various changes in the components of consumption behavior of Czech consumers can/will affect the consumption function and thus equilibrium output. Explain why the graph changes if consumption changes, and illustrate the effect on equilibrium output. Lastly, would it be possible for young Czechs to both spend a larger proportion of each new crown of income and still save in the same proportion as their elders? Explain.

The population of Czechia is ageing quickly and the old, who spend a relatively small proportion of each new crown (their monetary unit) of income, are being replaced by the young who spend a relatively larger proportion of each new crown of income. Older citizens also have different fixed consumption expenditures than in the younger population because of their lifestyles. Illustrate on a graph of planned expenditures how these various changes in the components of consumption behavior of Czech consumers can/will affect the consumption function and thus equilibrium output. Explain why the graph changes if consumption changes, and illustrate the effect on equilibrium output. Lastly, would it be possible for young Czechs to both spend a larger proportion of each new crown of income and still save in the same proportion as their elders? Explain.

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter9: Aggregate Demand

Section: Chapter Questions

Problem 1.1P

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