How much larger is consumption than investment

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The movements of consumption and investment

Go to the latest Economic Report of the President (www. gpoaccess.gov/eop/) and find Table B-2 ("Real GDP") in the Statistical Appendix. Note that you can download the statistical appendix separately in a spreadsheet which will be easier to work with. Retrieve annual data for the years 1959 to the most recent date available for personal consumption expenditures and gross private domestic investment. Note that the data are in real terms.

a. On average, how much larger is consumption than investment?

b. Compute the change in the levels of consumption and investment from one year to the next, and graph them for the period 1959 to the latest available date. Are the year-to year changes in consumption and investment of similar magnitude?

c. What do your answers in parts (a) and (b) imply about the average annual percentage changes of consumption and investment? Is this implication consistent with Figure 16-5?

Reference no: EM131133289

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