Question

Explain how changes in net wealth, the price level, interest rates, and expectations alter the consumption function?

Answer 1

when there is an increase in net wealth , consumption increases and vice -versa.This may happen cause u already own assets , so u may think of spending.

WIth increase in price level , consumption is discouraged.It can be seen in the basic demand function too.

With Rise in intrest rates , people try to save more and also , they wont try to lend money and spend it as intrest rate is high.So , it is also an offset to consumption function and vice versa

Expectations also play a role in consumption function , for example if a consumer expects that the income levels are going to fall , he would try to save more and consume less.

I hope this helps .If you have any queries , put it in the comments.I will edit/modify my answer accordingly.

Have a nice day :)