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Questions
Explain the subjective factors which determine consumption function.
Give reason or Explain the following statement :
There are many subjective factors determine consumption function.
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Solution 1
The following are some of the subjective factors that determine consumption function:
- Motive of precaution: People save money for the future in order to meet unexpected expenditure.
- Motive of foresightedness: People cut down their spending in order to meet future requirements for money. For examples, requirements for higher education, marriage, buying a house etc.
- Motive of independence: As per this motive, man saves more in order to depict more power and independence.
- Motive of pride: Another motive that prevents people from spending is wanting to maintain the same economic stability in the future. Providing some wealth to their future generations or making donations gives them a feeling of pride.
- Motive of enterprise: People prevent current consumption and save for the purpose of investing. Under this motive, people save to invest in a profitable enterprise.
- Motive of calculation: Under this motive, people save to invest in shares and debentures in order to increase their income.
Solution 2
There are many subjective factors that determine consumption function.
There are many subjective factors that determine consumption function. It is because subjective factors like motive or precaution, motive of foresight, motive of calculation motive of improvement, motive of independence, motive of enterprise, motive of pride etc. influence consumption function.
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