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

Ad curve is the aggregate demand, The AD curve is the aggregate demand ...

The AD curve is the aggregate demand The AD curve is the aggregate demand as a function of P whenthe goods and money market are both in equilibrium

What is probability the time between two successive calls, A one-car taxi c...

A one-car taxi company receives an average of 18 calls per day. The receptionist takes down details of the requested journey and relays them to the driver by radio. Each passenger'

Determine price level from the quantity theory of money, Q. Determine price...

Q. Determine price level from the quantity theory of money? The price level The price level is determined from the quantity theory of money:  P = (M.V)/Y

Manager of a firm, You are the manager of a firm that receives revenues of ...

You are the manager of a firm that receives revenues of $40,000 per year from product X and $90,000 per year from product Y. The own price elasticity of demand for product X is -1.

Estimate the optimal level of provision, There are a lot of mosquitoes in ...

There are a lot of mosquitoes in the island of Liholiho. Only two people live in this island, Robinson Crusoe and Man Friday. Their respective demand curves for mosquito control ar

Average price of a textbook, The demand for textbooks is Q=200-P+25U-50Pbee...

The demand for textbooks is Q=200-P+25U-50Pbeer. Assume that the unemployment rate U is 8 and the price of beer P beer is $2. When the average price of a textbook is P=$100, the el

What are the comparative benefits, What are the comparative benefit The...

What are the comparative benefit The idea of comparative benefit defines that a nation must specialise in the industries in which it has a comparative advantage. Comparative be

Demand and Supply, Calculate the equilibrium price and quantity?

Calculate the equilibrium price and quantity?

Market structures, illustrate and discuss the market structures competitive...

illustrate and discuss the market structures competitiveand non competitive for price determination

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