Consumption and GDP, Macroeconomics

Assignment Help:

At first, it may seem obvious that consumption will rely on Y. If GDP is doubled in real terms over a number of years, government consumption, private consumption and investment will also each roughly be doubled. If you draw a graph of GDP and consumption over time you see that consumption does grow by about the same rate as GDP. 

Though from this reasoning, we can't conclude that C relies on the Y since growth has been removed from our variables C and Y. We need to think of Y as a variable which varies over time around some average. Sometimes it is above the average and sometimes it's below the average however there is now upward trend. The same is true for C.

The crucial question then is whether consumption is above its average in periods when GDP is above its average and vice versa (technically, if detrended variables are correlated over time).


Related Discussions:- Consumption and GDP

The crowding out effect, what goals and policies are being discused to addr...

what goals and policies are being discused to address the crowding out effect?

Firm''s output at various levels of employment, Use the following data for ...

Use the following data for a firm's output at various levels of employment (L) to calculate: a) its marginal physical product of labor (MPPL) schedule; (b) its (MPPL/MRCL) schedule

Fiscal policies, All of the following fiscal policies will contribute to in...

All of the following fiscal policies will contribute to increasing budget deficits except: A. cuts in aid to farmers. B. tax cuts. C. increases in defense expenditures. D. increase

Franchise revoked is suing mercedes, In 1999 Mercedes-Benz USA adopted a ne...

In 1999 Mercedes-Benz USA adopted a new pricing policy, which it called NFP (negotiation-free process), that sought to eliminate price negotiations between customers and new-car de

What are the social economic and non economic factors, What are the social ...

What are the social economic and non economic factors? Development is also a procedure involving change in some social economic and non economic factors comprising: • Econom

Mutual funds into stock also funds from money market, How would the followi...

How would the following influence the growth rates of theM1 and M2 money supply figures over time? a. an increase in the quantity of U.S. currency held overseas b. a shift of f

Credit multiplier, how can the central bank influence the size of the multi...

how can the central bank influence the size of the multiplier

Health care and income transfers, During the past five decades, there has b...

During the past five decades, there has been a shift in the composition of the federal budget toward more spending on income transfers and health care and a smaller share for natio

Production possibilities table for consumer goods, To the right is a produc...

To the right is a production possibilities table for consumer goods (automobiles) and capital goods (forklifts): a. Show these data graphically. Upon what specific assumptions is t

what is gdp in this economy, I. Consider the following static optimization...

I. Consider the following static optimization problem. Suppose that a consumer has financial wealth W and owns the house H¯ . She has utility over housing H and nonhousing co

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd