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

Open market policy, describe how open market policy can be used to stimulat...

describe how open market policy can be used to stimulate economic activity in the country

Inflation, if govtment face cost push inflation which policy govtment shoul...

if govtment face cost push inflation which policy govtment should take to control inflatoin?

monetary account , link of monetary account with other sectors and its mea...

link of monetary account with other sectors and its meaning

Mankiw, Using the Mundell-Fleming model, describe how an increase in a coun...

Using the Mundell-Fleming model, describe how an increase in a country’s risk premium on the world interest rate can result in a higher level of real income. Under what circumstanc

Pros and cons of commercial transactions, Examine the pros and cons of comm...

Examine the pros and cons of commercial transactions in blood from the egoistic, the utilitarian, and the Kantian perspectives

Artificial intelligence and neural networks, Problem >> Explore the rel...

Problem >> Explore the relationship between Artificial intelligence and Neural networks. The systems which use this type of intelligence are known as artificial intelligent

Explain money market with inflation, Q. Explain money market with inflation...

Q. Explain money market with inflation? The money market with inflation  Let's begin with the money market diagram and introduce inflation. As M D relies positively on P

Effect which have the bond market, Firms such a Moody's and Standard & Poor...

Firms such a Moody's and Standard & Poor's study corporations that issue bonds. They publish "ratings" for the bonds- evaluation of the likelihood of default. Suppose these rating

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