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

Components of trade policy, COMPONENTS OF TRADE POLICY: External secto...

COMPONENTS OF TRADE POLICY: External sector reforms beginning with 1991 included dismantling of  trade restrictions along with tariff rationalization, a move towards current a

Bank of canada announces that it will raise the money supply, Suppose the B...

Suppose the Bank of Canada announces that it will raise the money supply in the future but does not change the money supply today. Using the Fisher equation, explain what happens t

Basic concepts and terminology, when domestic currency becomes more valuabl...

when domestic currency becomes more valuable in terms of foreign currency, the domestic currency is said to have

Consumer increases her purchases of compact disks, Suppose a consumer's inc...

Suppose a consumer's income increases from $30,000 to $36,000. As a result, the consumer increases her purchases of compact disks (CDs) from 25 CDs to 30 CDs. What is the consumer'

TRUE or FALSE, 1.the AD curve represents at the same time the demand for go...

1.the AD curve represents at the same time the demand for goods, money and labor in the economy 2.in the AS-AD model, higher competition among producers leads to a medium run equil

Assignment , I want you to solve problem in Macroeconomics.It is in the fil...

I want you to solve problem in Macroeconomics.It is in the file attachment.

Balance of payments, Balance of Payments   All countries have economic t...

Balance of Payments   All countries have economic transactions with other countries. These consist of import and export of goods and services, official and private gifts and don

Describe an algorithm which gives initial amount , This problem involves th...

This problem involves the question of computing change for a given coin system. A coin system is defined to be a sequence of coin values v1 (a) Let c ≥ 2 be an integer constant

Outline each approach as positives and negatives, In a group environment, s...

In a group environment, should leaders be assigned at the beginning of a project or should leaders emerge as the group is working on the project? Outline the positives and negative

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