Question 1
According to Lewis et al. (2010) Figure 10.1, the consumption ratio was over 100% in 2004. (Figure 10.1 is also included in the lecture slides).
a) How is saving defined?
b) What was the saving ratio in 2004?
c) Explain how the consumption ratio can be over 100% (of disposable income).
Question 2
Explain the ‘permanent income’ theory of household consumption expenditure.
Question 1According to Lewis et al. (2010) Figure 10.1, the consumption ratio was over 100% in 2004. (Figure 10.1 is also included in the lecture slides).a) How is saving defined? b) What was the saving ratio in 2004? c) Explain how the consumption ratio can...
