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

Multiple expansion in banking, Multiple Expansion We have seen that a s...

Multiple Expansion We have seen that a single bank in a banking system can lend rupee for rupee with its excess reserves. What is the lending ability of the commercial banking

Climate and terrain in several south american countries, Climate and terrai...

Climate and terrain in several South American countries are conducive to growing coffee efficiently. While other countries can grow coffee, they are not as efficient and effective

TERMS OF TRADE, HOW INCOME TERMS OF TRADE DIFFER WITH COMMODITY TERMS OF TR...

HOW INCOME TERMS OF TRADE DIFFER WITH COMMODITY TERMS OF TRADE"

Relationship between oil prices and several indicators, "The price of Brent...

"The price of Brent crude oil has hit $111 a barrel and US crude also rose in price, as worries persist about the unrest in Libya". (BBC News, 2011) This quote, from the BBC news w

Best estimate of real gdp, Consumption = $3 trillion, Investment spending =...

Consumption = $3 trillion, Investment spending =$2 trillion, Government purchases = $2 trillion, net exports via the ROW is $0 trillion. 1. What is the best estimate of real GDP

Monetary policy , Under what conditions does the text explain that monetary...

Under what conditions does the text explain that monetary policy is neutral? If it is neutral under these conditions, why is it still an important economic policy tool? Your answer

Aplia Assignment, Need answers for problems after chapters 10, 11 & 12 for ...

Need answers for problems after chapters 10, 11 & 12 for Macroeconomics in Aplia.com. Need today or tomorrow. Can you help?

Calculating a country''s balance of payments, Which of the following is con...

Which of the following is considered when calculating a country's balance of payments? Military expenditures state unemployment domestic inflation rates foreign inflation rates.

Bonds are more attractive to investors, Briefly explain if you agree with t...

Briefly explain if you agree with the following statement: If interest rates rise, bonds become more attractive to investors, so bond prices rise. Therefore, when the interest rat

Describe endogenous growth theory, Q. Describe Endogenous growth theory? ...

Q. Describe Endogenous growth theory? Endogenous growth theory or new growth theory was developed in the 1980s by Paul Romer and others. In neo-classical model, technological p

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