Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 12: Q. 1 (page 274)

How could toughened federal regulations of businesses during the current decade have inhibited a rightward shift in the imvestment function?

Short Answer

Expert verified

Changes in real disposable income produced movement along the consumption function, while shifts in the consumption function were induced by changes in household net worth.

Step by step solution

01

Introduction

The recovery of household expenditure on services has always been slower than for the recovery of household expenditure on tangible commodities. During the recovery following the conclusion of the 2007-2009depression, nonetheless, this disparity was substantially more pronounced.

02

Conclusion

Simultaneous movement along and shifts in the consumption function account for observed changes in projected aggregate consumption spending.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Classify each of the following as either a stock or a flow.

a. Myung Park earns \(850per week.

b. Time Warner purchases \)100million in new telecommunications equipment this month.

c. Sally Schmidt has \(1,000 in a savings account at a credit union.

d.XYZ, Inc., produces 200units of output per week.

e. Giorgio Giannelli owns three private jets.

f. Apple's production declines by 750digital devices per month.

g. Russia owes \)25 billion to the International Monetary Fund.

At an initial point on the aggregate demand curve, the price level is125, and real GDP is S18trillion. When the price level falls to a value of 120, total autonomous expenditures increase by\(250 billion. The marginal propensity to consume is \)0.7. What is the level of real GDP at the new point on the aggregate demand curve?

What does the theory of consumption spending predict should have happened to real saving during the particular three-month period that Price was considering? Explain briefly.

At an initial point on the aggregate demand carve, the price level is100, and real GDP is\(18trillion. After the price level rises to110 , however, there is an upward movement along the aggregate demand curve, and real GDP declines toSl4 trillion. If total planned spending declined by \)200 billion in response to the increase in the price level, what is the marginal propensity to consume in this economy?

How might recent increases in state and federal tax rates on incomes that businesses derive from capital investment have contributed to the investrment function's failure to rebound?
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free