Use the following information to work Problems 1 to 3

Canadian's Wealth Rises

Canadian net saving in the first quarter of 2017 was $22 billion. Holdings of financial assets increased by $162 billion and the value of shares in corporations increased by $113 billion.

Source of data: Statistics Canada, CANSIM Table 378-0119

1. Explain why higher share prices are equivalent to saving.

Because an increase in value of shares which is an assets owned by people is equivalent to an increase in their

2. Explain how a rise in household financial assets would be expected to influence consumption expenditure and saving and how the consumption function and the saving function would change.

3. Draw a graph to illustrate how a rise in household financial assets would change the consumption function and saving function.