Relationship between consumption and saving. To explain the motivation for saving.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 4, Problem 1RQ

To determine

Relationship between consumption and saving. To explain the motivation for saving.

Expert Solution & Answer

Explanation of Solution

Consumption refers to the utilization of services and goods by households. Saving refers to the amount of leftover from the amount of disposable income received in each period after subtracting the consumption spending of an individual.

The income of an individual remains constant for a particular period. It can be either spent on consumption spending or can be saved. Thus, a rise in consumption spending lowers the income left for saving.

Hence, it can be concluded that consumption and saving are inversely related. This means that as the consumption increases, saving declines (as income stays the same) and when consumption decreases, saving rises.

Consumers are unaware of their income status in the future. Thus, for the bad days in the future, consumers prefer to save from the current income. This uncertainty towards the future motivates consumers to save.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Financial institutions have warned that increased life expectancy means that many people have not saved enough for their retirement. If true, what will the consumption path of these people look like as they reach their retirement years? Will this consumption path be smooth? And how will an increase in investment demand change the equilibrium interest and quantity of savings? Use a graph for the loanable funds market.

Explain THREE (3) factors that can influence investment in an economy.

Discuss the overall purpose people have for investing. Define investment

Answer 2

Question

Chapter 4, Problem 1RQ

To determine

Relationship between consumption and saving. To explain the motivation for saving.

Expert Solution & Answer

Explanation of Solution

Consumption refers to the utilization of services and goods by households. Saving refers to the amount of leftover from the amount of disposable income received in each period after subtracting the consumption spending of an individual.

The income of an individual remains constant for a particular period. It can be either spent on consumption spending or can be saved. Thus, a rise in consumption spending lowers the income left for saving.

Hence, it can be concluded that consumption and saving are inversely related. This means that as the consumption increases, saving declines (as income stays the same) and when consumption decreases, saving rises.

Consumers are unaware of their income status in the future. Thus, for the bad days in the future, consumers prefer to save from the current income. This uncertainty towards the future motivates consumers to save.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 4, Problem 1RQ

To determine

Relationship between consumption and saving. To explain the motivation for saving.

Expert Solution & Answer

Explanation of Solution

Consumption refers to the utilization of services and goods by households. Saving refers to the amount of leftover from the amount of disposable income received in each period after subtracting the consumption spending of an individual.

The income of an individual remains constant for a particular period. It can be either spent on consumption spending or can be saved. Thus, a rise in consumption spending lowers the income left for saving.

Hence, it can be concluded that consumption and saving are inversely related. This means that as the consumption increases, saving declines (as income stays the same) and when consumption decreases, saving rises.

Consumers are unaware of their income status in the future. Thus, for the bad days in the future, consumers prefer to save from the current income. This uncertainty towards the future motivates consumers to save.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 4, Problem 1RQ

To determine

Relationship between consumption and saving. To explain the motivation for saving.

Expert Solution & Answer

Explanation of Solution

Consumption refers to the utilization of services and goods by households. Saving refers to the amount of leftover from the amount of disposable income received in each period after subtracting the consumption spending of an individual.

The income of an individual remains constant for a particular period. It can be either spent on consumption spending or can be saved. Thus, a rise in consumption spending lowers the income left for saving.

Hence, it can be concluded that consumption and saving are inversely related. This means that as the consumption increases, saving declines (as income stays the same) and when consumption decreases, saving rises.

Consumers are unaware of their income status in the future. Thus, for the bad days in the future, consumers prefer to save from the current income. This uncertainty towards the future motivates consumers to save.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 4, Problem 1RQ

To determine

Relationship between consumption and saving. To explain the motivation for saving.

Expert Solution & Answer

Explanation of Solution

Consumption refers to the utilization of services and goods by households. Saving refers to the amount of leftover from the amount of disposable income received in each period after subtracting the consumption spending of an individual.

The income of an individual remains constant for a particular period. It can be either spent on consumption spending or can be saved. Thus, a rise in consumption spending lowers the income left for saving.

Hence, it can be concluded that consumption and saving are inversely related. This means that as the consumption increases, saving declines (as income stays the same) and when consumption decreases, saving rises.

Consumers are unaware of their income status in the future. Thus, for the bad days in the future, consumers prefer to save from the current income. This uncertainty towards the future motivates consumers to save.

Answer 6

Chapter 4, Problem 1RQ

To determine

Relationship between consumption and saving. To explain the motivation for saving.

Expert Solution & Answer

Explanation of Solution

Consumption refers to the utilization of services and goods by households. Saving refers to the amount of leftover from the amount of disposable income received in each period after subtracting the consumption spending of an individual.

The income of an individual remains constant for a particular period. It can be either spent on consumption spending or can be saved. Thus, a rise in consumption spending lowers the income left for saving.

Hence, it can be concluded that consumption and saving are inversely related. This means that as the consumption increases, saving declines (as income stays the same) and when consumption decreases, saving rises.

Consumers are unaware of their income status in the future. Thus, for the bad days in the future, consumers prefer to save from the current income. This uncertainty towards the future motivates consumers to save.

Answer 7

Chapter 4, Problem 1RQ

To determine

Relationship between consumption and saving. To explain the motivation for saving.

Answer 8

Expert Solution & Answer

Explanation of Solution

Consumption refers to the utilization of services and goods by households. Saving refers to the amount of leftover from the amount of disposable income received in each period after subtracting the consumption spending of an individual.

The income of an individual remains constant for a particular period. It can be either spent on consumption spending or can be saved. Thus, a rise in consumption spending lowers the income left for saving.

Hence, it can be concluded that consumption and saving are inversely related. This means that as the consumption increases, saving declines (as income stays the same) and when consumption decreases, saving rises.

Consumers are unaware of their income status in the future. Thus, for the bad days in the future, consumers prefer to save from the current income. This uncertainty towards the future motivates consumers to save.