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

Estimated profit of typical start-up businesses, Typical start-up businesse...

Typical start-up businesses' estimated profit are forecasted as following: State Bad Good Probability 81% 21%

What are the capitalist countries in the world, Capitalism is the dominant,...

Capitalism is the dominant, most used form of government there is in the globe today. Presently, over 80% of countries use capitalism and a free market economy.

How do you explain gni per capita, To determine of the wealth is earned by ...

To determine of the wealth is earned by nations by economic activates all around the globe. Gross National Income comprises the total value of goods and services formed within a

OPEN ECONOMY, EXPLAIN THE 5 SECTOR MODEL (OPEN ECONOMY) IN INCOME DETERMINA...

EXPLAIN THE 5 SECTOR MODEL (OPEN ECONOMY) IN INCOME DETERMINATION

What do you mean by patulin, Q. What do you mean by Patulin? It is a to...

Q. What do you mean by Patulin? It is a toxic and antibiotic metabolite produced by several species of Penicillin, Aspergillus and Paeciliomyces but the most important in the c

What is globalization, what are its effects on the Indian economy? Ans) ...

what are its effects on the Indian economy? Ans) It is largely positive. Globalization has brought a lot of jobs and large sums of investment to India. India's economy has been

Relation between nominal and real interest rate, Q. Relation between nomina...

Q. Relation between nominal and real interest rate? Relation between nominal interest rate, real interest rate and inflation  If we signify the nominal interest rate by R

The model building, THE MODEL BUILDING    A model of individual or a...

THE MODEL BUILDING    A model of individual or aggregate economic phenomena represents a simplification of real world economic complexities. It may be expressed in words, ta

Design-build-operate engineering company, A design-build-operate engineerin...

A design-build-operate engineering company burrowed $6 million for 3 years so that in can purchase new equipment. The interest is compounded and the total amount owed will be paid

Consumption, what is the impact of interest rate in consumption

what is the impact of interest rate in consumption

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