Question

3	a)	How does ‘Expected Desirable Income Hypothesis’ shape the consumption pattern of Islamic society?	5
	b)	Give an account of the distribution of inheritance of a deceased among his primary heirs with suitable example.	5

Answer 1

Expected desirable income hypothesis is a part of permanent income hypothesis. The permanent income hypothesis is consent with the consistent level of consumption by the people with expected long term income. A worker will save his earning only if the current income is higher than the anticipated level of permanent income. There will not be an upward consumer spending until the workers reform expectation about future income. The community which have lot of assets from there ancestors, like Islamic community will spend with regard to there current and future income. Like this Islamic community they have a permanent income till their death which was based on the expected future income. This permanent income will not affected by any unanticipated or unexpected event. They have a permanent consumption pattern which is mainly depend on the permanent income. The average propensity of consumption is constant for them.
Arab families having high rate of permanent income which created by their ancestors. They will enjoy the same level of consumption from birth to death. They have constant marginal propensity to consume. There consumption and the consumption bundles are based on their permanent income. The consumption patterns of a family having influence from there ancestors. They save a high level of money for their next generation also.