Microeconomics

a. What are the non-income determinants of consumption and saving?

a. The non-income determinants of consumption and saving are “the amount of disposable income is the basic determinant of the amounts households will consume and save.” (McConnel, Brue, Flynn, pg. 193) The determinants that are non-income are wealth, borrowing, expectations, and interest rates. Other important points in consumption in saving are switching to real GDP, changes along schedules, schedule shifts, taxation, and stability.

b. Please select one from your answer to part a, and explain how it relates to you on a personal level.

a. From the list above of non-income determinants one particular factor affects me on a personal level which is interest rates. Everything from car payments to school loans and even certificate of deposits all depend on interest rates. This causes me to step back and observe and shop around for the best overall deal. “Lower interest rates shift the consumption schedule slightly upward and the saving schedule slightly downward.” (McConnel, Brue, Flynn, pg. 194)

Question 2

Some economists have argued that a nation’s prosperity is completely dependent on their own resources, and policies. But, that line of thinking may be missing an important element: globalization. So, in the analysis of net exports and real GDP, what international economic linkages exist, if any?

a. What are the non-income determinants of consumption and saving?

a. The non-income determinants of consumption and saving are “the amount of disposable income is the basic determinant of the amounts households will consume and save.” (McConnel, Brue, Flynn, pg. 193) The determinants that are non-income are wealth, borrowing, expectations, and interest rates. Other important points in consumption in saving are switching to real GDP, changes along schedules, schedule shifts, taxation, and stability.

b. Please select one from your answer to part a, and explain how it relates to you on...