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in desired agreegate expenditure. in the consumption section. is wealth induced or autonomous. for instance say there is 300+0.5Y+0.05W. where does wealth go?
As wealth is not constant, so it is induced. If the consumption function is 300 + 0.5Y + 0.05W, then wealth is directly related with GDP.
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investment spending is a function of
(1) the interest rate
(2) government spending
(3) exports
(4)imports
(1) the interest rateInvestment spending is a function of the real interest rate.
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Unemployment can decrease if...
1.there is an economic recession.
2.education system improves.
3.investment spending increase.
4.aggregate demand decrease.
The answer is: 3. investment spending increase. Increase in the investment spending increases the aggregate demand. This in turn increases the employment level in the economy, reducing the demand deficient...
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If the government increases government expenditure, but keeps the tax rate constant, consumption spending will __________, total tax revenues will __________, and investment spending will __________.
If the government increases government expenditure, but keeps the tax rate constant, consumption spending will increases, total tax revenues will stay constant, and investment spending will increases.
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Explain how the interest rate works in the classical system to stabilize aggregate demand in the face of autonomous changes in components of aggregate demand such as investment or government spending
The interest rate is determined by the amount of savings and investment in an economy. The interest rate affects the aggregate demand in that if the interest rate is high...
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Explain the effect of a decrease in the stock of wealth on real wages? aggregate employment and aggregate output supply?
A decrease in the stock of wealth will lead to a decrease in labor, leading to a decline in real wages and aggregate employment. This will, in turn, decrease the...
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How the interest rate works in the classical system to stabilize agreegate demand in the face of autonomous changes in components of aggregate demand such as investment and government spending
In the classical system, an increase or drop in the interest rate tends to lower/raise economic activity, resulting in a fall/increase in aggregate demand.
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If both planned savings and planned investment increase by $1 billion at each real interest rate, explain the change in the real interest rate and equilibrium quantity of loanable funds.
Changes in interest rates in various segments of the financial market affect the willingness of economic participants to borrow, invest, save or consume and, accordingly, translate into the dynamics of...
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Depreciation cause? 1.Net investment = gross investment 2.Net investment > gross investment 3.Net investment < gross investment 4.Net investment = 0
.Net investment < gross investment
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One of the following best explains consumption spending Select one: a. Spending on infrastructure b. None of the option are correct c. Spending on capital goods d. Spending on final consumer goods
\d. Spending on final consumer goods
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