What are the five main determinants of consumption spending Which of these is

# What are the five main determinants of consumption

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162) What are the five main determinants of consumption spending? Which of these is themost important? 162) Answer: The five main determinants of consumption spending are current disposable income, household wealth, expected future income, the price level, and the interest rate. The most important determinant is current disposable income. Page Ref: 775/393 Learning Outcome: Macro - 8: Investigate the relationship between income and expenditures. 163) Suppose the United States experiences a long period of relatively stable prices whileother countries experience long periods of inflation. How will this affect U.S. netexports? 163) Answer: If inflation in the United States is lower than inflation in other countries, then prices of products and services produced in the United States increase at a slower pace than the prices of products and services of other countries. This difference in the price levels increases the demand for U.S. goods relative to foreign goods. U.S. exports increase, imports decrease, and U.S. net exports rise. Page Ref: 787/405 Learning Outcome: Macro - 8: Investigate the relationship between income and expenditures. 164) Given Table 12 - 5 below, fill in the values for saving. Assume there are no taxes. Table 12 - 5 National Income Consumption Saving \$7,500 \$5,400 8,000 5,800 8,500 6,200 9,000 6,600 164) Answer: When taxes are zero, saving is the difference between national income and consumption: Saving = national income - consumption. S = Y - C Using the table: National Income Consumption Saving \$7,500 \$5,400 \$2,100 8,000 5,800 2,200 8,500 6,200 2,300 9,000 6,600 2,400 Page Ref: 779 - 780/397 - 398 Learning Outcome: Macro - 2: Explain the relationship between expenditure and income. 30
165) Given Table 12 - 6 below, fill in the values for saving. Assume taxes = \$800. Table 12 - 6 National Income Consumption Saving \$11,400 \$7,500 11,800 7,800 12,200 8,100 12,600 8,400 165) Answer: Saving = national income - consumption - taxes.

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