# Questions tagged [consumption]

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### Finding marginal propensity to consume

For the first part of my question: I've calculated my IS (Biens et services = Goods and services) and LM (Monnaie = Money) equations and equilibrium output and interest rate for which I obtained: Y = ...
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### 5000 crore spent on Anant Ambani wedding versus rise in recharge packs by Jio

Around 5000 crore INR (598 172 000 USD) spent on Anant Ambani's wedding, who is son of the richest Indian entrepreneur Mukesh Ambani. While doing a recharge today, I noted that the price has been ...
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### Why does higher income lead to higher consumption spending in credit-constrained households?

Title. Higher income can come from better job, or moving from part-time to full-time employment.
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### Do standard consumer theory axioms rule out corner solutions?

By standard consumer theory axioms I mean (1) completeness, (2) transitivity, (3) continuity, (4) non-satiation, and (5) strict convexity of the indifference curves. If these axioms are not sufficient ...
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### Negative externality in consumption to a Cobb Douglas utility function

I am performing a brief analysis with a Computable General Equilibrium Model approach. I want to apply a negative externality in consumption to a Cobb Douglas utility function, any idea to do it and ...
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### consumption, income and utility

Question Description: Consider an economy populated by a large number of Farmers (F) and Computer Scientists (CS). Each person divides his 24-hour day into labour and leisure. If a Farmer decides to ...
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### How should I add my period by period constraint in lagrangian?

This question just suddenly comes to my mind, and I'm not sure what i'm thinking is correct: suppose I want to maximize my cumulative expected utility $E\left[ \sum_{t=0}^{T}\beta^tU(c_t) \right]$ by ...
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### For my bachelors, would it make sense to use C+G (as Consumption + Government Expenditure) as an indicator for the prosperity of the economy?

Because G is also really just consumed by the people, wouldn´t it make sense to measure all the things that people consume to measure the prosperity of an economy? At the end of the day, people in an ...
192 views

### Interest rates vs consumption tax brackets

I know only a little bit about economics, but I have been puzzled why interest rates should be used to combat inflation where direct solutions exist. I have some trouble understanding why interest ...
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### Intertemporal Utility Optimization For Multiple Goods

I'm building an economic simulation game and I'm trying to solve for the values that a person will spend on each good and the amount they will save in the current period, taking into account all ...
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### Convex Combination of pairs of points

Is it appropriate/meaningful to write vector/points $(a,b) \le (c,d)$, where i would mean component wise each component is $\le$ Specifically is my example below with reference to concavity ...
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### Why do companies and stores never seem to take into consideration the fact that few people want ugly colours of the same product?

In 1997, I traveled far and wide to hunt down an original Tamagotchi. Whereas everyone else had one of the numerous clones, often with many more features, I had to have the real Tamagotchi. When I ...
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### Macroeconomics, price setting and wage setting [closed]

What happens to prcie setting and wage setting when consumption falls? I already looked at what happens to IS-curve and LM-curve.
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Suppose our utility function is the usual CRRA utility with $\gamma=2$ so that: $$u(C) = \frac{C^{1-\gamma}}{1-\gamma} = -\frac{1}{C}$$ Now suppose there are 2 goods, A and B, available for ...
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### Some basic Consumption CAPM questions

Say we are in a world described by the consumption CAPM. All investors in this world have quadratic utility. Also, assume that consumption is as follows: $$c_{t+1} = (1+m_t)c_t + s_t c_t e_t$$ where ...
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### IS curve, interest rate and consumption

It is possible for the interest rate to affect the expenditure with consumption. An increase in the interest rate could, in principle, lead to increases in savings and, that way, to a decrease in ...
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### Does salary contribute to GDP under the expenditure approach?

The question really confuses me. On one hand, we can consider the wages as purchasing services from employees. On the other hand, the salary is also part of the cost of the products, thus it isn't &...
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### Why do low-income earners tend to spend more?

I am reading an article in the Economist. It is discussing the China's unbalanced economy especially the lower household consumption proportion in GDP than the global average. The writer thinks the ...
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### What would be the economic effect of widespread instances of individuals paying off consumer debt?

In light of the economic impact of the recent shutdowns in response to COVID-19, the Australian Government is considering bringing forward planned tax cuts, that were do to be implemented gradually ...
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Question: Consider a consumer with utility function $U(x,y,z)=y\min\{x,z\}$. The prices of all three goods are the same. The consumer has $100 to spend on these three goods.The demands will be such ... • 203 1 vote 1 answer 27 views ### Does anybody knows where I should look for a proxy for consumption to estimate a two factor C-CAPM? Has anybody seen, any textbook recommendation that refers to the proper proxy for consumption. I am trying to estimate a two factor consumption CAPM, namely we I add a second factor apart from ... • 969 1 vote 1 answer 373 views ### How does the GDP multiplier work? When we learn about the GDP multiplier, it is portrayed as 1/MPS, because savings are supposedly a leak out of consumer spending. However, what I don't understand is aren't those savings spent anyways ... 1 vote 0 answers 48 views ### Why Does Deficit Spending Work Without a Liquidity Trap? My understanding is that in a functioning economy, the financial market clears when the nominal interest rate is above zero. It is only when it reaches zero that a liquidity trap occurs and the ... 0 votes 1 answer 152 views ### Why does the aggregate consumer spending decrease due to to lower expected future disposable income instead of MPC? This illustration is from Krugman's macroeconomics textbook, it's supposed to illustrate following situation (assuming that it happened for many people): Conversely, suppose you have a good job but ... • 1,135 0 votes 1 answer 54 views ### Does the investment component of GDP (demand side) identity include expenditures by the government and households? In the identity GDP=C+I+G+(X-M) does "I" include expenditures by the government and households? For example, if a construction firm builds new residential properties and a household buys this ... • 583 1 vote 2 answers 256 views ### Marginal rate of substitution notation: I am having a dumb doubt in writing some slides for an undergraduate class. I want to be consistent with the use in microeconomics but this easy thing is really bugging me: Mas-colell pag. 54$ ...
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A consumer has utility function $U(x,y)=(x−2)y$, where $x≥2$ and $y≥0$. The price of $x$ is $P_x$, the price of $y$ is $P_y$ and the consumer's income is $I>2P_x$. ($x$ and $y$ do not have to be ...