ECON MACRO
5th Edition
ISBN: 9781337000529
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 9, Problem 3.6P
To determine
Greater change in investment than in consumption from year to year.
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Explain why investment (I) varies more from year-to-year than consumption (C).
Using a suitable graph, what is the effect on national income if people increase autonomous saving?
How does a change in real interest rate affect investment spending?
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- (Investment) Why would the following investment expenditures increase as the interest rate declines?arrow_forwardWhat does it mean by the logic: When output is too low, what needed is an increase in demand for goods and services. Investment is one component of demand, and saving equals investment. Therefore, if the government could just convince households to attempt to save more, then investment and output would increase.arrow_forwardHow does investment as defined by economists differ from investment as defifined by the general public? What would happen to the amount of investment made today if firms expected the future returns to such investment to be very low? What if firms expected future returns to be very high?arrow_forward
- Why is investment an important component in a country's output? what theory supports investment in GDParrow_forwardHistorically, the change in real GDP during recessions has been a. mostly a change in investment spending.b. mostly a change in consumption spending.c. about equally divided between consumption and investment spending.d. sometimes mostly a change in consumption and sometimes mostly a change in investment.arrow_forwardHow would an increase in the interest rate affect consumption and investment function?arrow_forward
- Describe the Investment Decision for a Simple Investment?arrow_forwardWhat happens to domestic investment as the real interest rate rises? Explain your answer.arrow_forwardAssume a country would like to increase investment by limiting consumption. What would be the point of a policy like that? What would be the impact on the economy? Who would benefit? Who would lose out?arrow_forward
- Why is consumption spending insufficient to explain economic growth and rising standards of living?arrow_forwardWhich sector (Households, Businesses, or International) spends the most? Which sector spends the least? Which sector, because of its volatility, has an importance greater than is warranted by its size?arrow_forwardIs it possible for total saving to fall when people become more thirfty?arrow_forward
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