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- Preciously how the mpc and apc differ ? Annd howhich 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 toOther things equal, a low saving rate ultimately tends to cause. O a relatively little new purchasing of real capital by firms Ob. relatively few start-ups of new businesses Oc neither relatively little new purchasing of real capital by firms nor relatively few start-ups of new businesses O d. both relatively little new purchasing of real capital by firms and relatively few start-ups of new businesses
- If disposable income rises from $15,000 to $20,000 and the marginal propensity to consume equals 0.85, then saving must increase by: O $500 O $750 $1,000 O $2,000 O $4,2502. is it possible for total saving to fall when people beome more thirfty?I. EOQ Model Suppose during your college life, every year you need $5,000 cash to spend in addition to the studying expenses. Each time in need of cash, you decide to go to the bank for that. And the transportation costsyou $5 (assumed amount) of going to the bank and coming back. Assume that the current saving/checking link account has an interest rate of 5%. Please find the optimal solution of the amount of cash each time for the withdraw.
- GAssume an economy where there are two producers: a wheat producer and a bread producer. In agiven year, the wheat producer grows 3 million tonnes of wheat, of which 2.5 million tonnes aresold to the bread producer at $30 per bushel, and 0.5 million tonnes are stored by the wheatproducer to use as seed for next years crop. The bread producer produces and sells 100 millionloaves of bread to consumers for $3.50 per loaf. Determine GDP in this economy during this yearusing the product and expenditure approaches.You have an avocado tree, which grows 100 avocados this year, 60 next year. Your neighbor has an avocado tree, which grows O avocados this year, 150 next year. Under agreement "1 today = 2 tomo". Let s be the number of avocados you save. Solve for your optimal saving: s=? 35 You have an avocado tree, which grows 100 avocados this year, 60 next year. Your neighbor has Let s be the number of avocados you save. avocado tree, which grows 0 avocados this year, 150 next year. Under agreement "1 today = 2 tomo". Under the optimal saving s you solved in the previous question. Your consumption this year=? (i.e. how many avocados would you consume this year) You have an avocado tree, which grows 100 avocados this year, 60 next year. Your neighbor has an avocado tree, which grows O avocados this year, 150 next year. Under agreement "1 today = 2 tomo". Let s be the number of avocados you save. Under the optimal saving s you solved in the previous question. Your consumption next year=? (i.e. how…
- Explain 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 lendersBased on the information presented below, what is the equation representing the saving for this economy? GDP (Y) $0 100 200 300 Cunsumption (C) $60 120 180 240 Oa. S = -60 + 0.6Y O b. S = 60+ 0.4Y O c. S = -40 +0.75Y O d. S= -60+ 0.4Y Saving (S) S-60 -20 20 60 Investment (1) $100 100 100 100Complete the table directly below by calculating MP and AP. Inputs ofL TP MP AP 0 01 152 343 514 655 746 807 838 82 Plot the TP, MP and AP and explain in detail the relationship between eachpair of curves. Explain why PM first rises, then declines, and ultimatelybecomes negative.
