PRINCIPLES OF MACROECONOMICS QUIZ #3 – COVERING CHAPTERS 8 AND 9 ANSWERS 1.What is the relationship between consumption and the following economic variables: household income, wealth, household's expectations about the future, and interest rates?
2.Draw a graph of the consumption function and explain what the vertical intercept means and the slope. Make sure to label both axes.
3.Explain any differences between actual investment and planned investment. Also, is it possible for actual investment to be greater than planned investment? If so, explain.