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

Economics, list of macro-economics problems of indian economy

list of macro-economics problems of indian economy

What are the gains from trade, Shows the productivity for the countries Pin...

Shows the productivity for the countries Pin and Pang. Machines Bread Pin     4 or 3 Pang 3 or 8 1) If the working population of Pin and Pang are both 6 million, divide

Determination of all endogenous variables, Determination of all endogenous ...

Determination of all endogenous variables  We can explain how all the endogenous variables are determined in below figure:  Figure: The Keynesian model with the Phillips c

Explain the philips curve, Problem: Describe whether, the given stateme...

Problem: Describe whether, the given statements (a-f) are True, False or Uncertain. Briefly justify our answer. Questions (g) - (h) show all your calculations. No marks will be

Describe keynesian cross model, Q. Describe Keynesian cross model? Keyn...

Q. Describe Keynesian cross model? Keynesian cross model is a simple version of what we call the 'complete Keynesian model' or simply the Keynesian model. Keynesian model has a

Define ndp, The following is the information from the national income accou...

The following is the information from the national income accounts for a hypothetical country: GDP

Allocate their scarce resources, What are the three methods that societies ...

What are the three methods that societies have used to allocate their scarce resources? Give an example of each method. Give an example of a good that uses all three methods at onc

Determine the example of currency inside banks is not money, Determine the ...

Determine the example of Currency inside banks is not money An example may also illustrate this important fact: Eric has 100 euro - this amount is obviously part of the

Macroeconomic problems, Question 1: The common characteristics of LDC...

Question 1: The common characteristics of LDCs include low GDP per capita, capital scarcity, high unemployment, chronic budget deficit, high levels of external debt, hig

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