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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).
Assume that the demand for running shoes is highly inelastic and the supply curve for running shoes is highly elastic. Suppose that the tastes of the exercising public shift away f
Q. Definition of Money? Before talking over macroeconomic models we should define what we mean by money. Money has aninteresting and long history and an understanding of how we
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what cause balance of payment curve to shift
The following Table B presents the 2010 population, employment, and unemployment data among working age persons for several countries. a. Calculate the number of people in the l
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Whenever real GDP declines, nominal GDP must also decline
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Suppose you have $10,000 and wish to purchase an annuity that pays you a fixed dollar amount every month. How much would you receive each month if the annuity rate is 1% and you in
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