Relationship among consumption expenditures

Reference no: EM1336325

You all hear on TV every day or so that the US consumer has been holding up and kept our economy going. Conversely, you have heard that the major cause of the current economic weakness has been the rapid decline in business investment.

Business inventories are a large component of business investments.
In the 3rd and 4th quarter of 2001, a drastic reduction of business inventories occurred, as it did in the 4th quarter of 2000 before the recession started. These are two examples of many in economic history where inventory drawdowns have preceded the low point of the economic cycle.

Since Inventories are not a large component of GDP, how can they affect GDP so sharply? Currently, Inventories are at an extremely low level by historical standards. How do you expect the replenishment cycle will affect GDP in the near future? Be focused on the definition of GDP (Expenditures Approach and Income Approach), the relationship between consumption expenditures and inventories as well as their interdependence, and think in terms of the Multiplier.

Reference no: EM1336325

Questions Cloud

Lower standard of living in every of the three nations : imply a lower standard of living in every of the three nations compared to the situation where they are united into a single new country.

Explain market segmentation explained in this solution : Explain Market segmentation explained in this solution and How would you describe the different segments

Enron and cindy olson''s role : Should Cindy Olson have made her first priority Enron or its employees? Explain your reasoning. I have my own opinions of this subject but would like to hear another

Suppose we have a network of nodes : suppose we have a network of nodes connected via point to point links, and a source S sends a message that will be broadcast to all nodes using Reverse-Path-Flooding. Assume that routers do not keep track of broadcast messages they have seen earli..

Relationship among consumption expenditures : Relationship among consumption expenditures and inventories as well as their interdependence, and think in terms of the Multiplier.

Three forces or trends from the remote environment : Three forces or trends from the remote environment

Regarding third party liability : Explain what legal rights, if any, Sally has as to this contract for the car. Discuss specific points of third party liability laws.

What are the project objectives : Briefly explain the first five points of the Project Scope Checklist in relation to your project and What are the project objectives

Define the edge connectivity of a tree is 1 : The edge connectivity of an undirected graph is the minimum number k of edges that must be removed to disconnect the graph. For instance, the edge connectivity of a tree is 1, and the edge connectivity of a cyclic chain of vertices is 2.

User Account

All Pages