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Intended or planned Investment
Expenditure on investment depends on business expectations on the chance of making profits and on the availability of funds for the purchase of producer goods. Although business expectations re complex in nature, a rough approximation is that the expectations on profits rise or fall in direct response to movements in the GNP this year increases businessmen expect an increase in planned consumption expenditures, and hence profits to increase next year.
Thinking about modifications in the model again: Go back to the original model again, but add a marginal propensity to invest, this is, suppose that I = f ( i and Y). The MPI is d
Another vital relationship that is often referred to in economic analysis is the relationship between consumption expenditure andprice elasticity. From the law of demand, we know t
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Analysis of unemployment in relation to economics
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