Movements along the consumption function

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Reference no: EM138662

Q1. Are all expenditures of a government included in the calculation of GDP for that nation? Explain why or why not? If it is not then why government expenditures should be excluded from GDP? Are income taxes collected by the government from consumers included in GDP and, if so, how?

Q2. Explain the following statement: "Changes in disposable income lead to movements along the consumption function while changes in wealth lead to a shift of the consumption function." Use examples to illustrate your response.

Reference no: EM138662

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