Consumption and investment in recession.

Question

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Answer 1

Question

Chapter 10, Problem 1QQ

To determine

Consumption and investment in recession.

Expert Solution & Answer

Answer to Problem 1QQ

Option (c) is the correct answer.

Explanation of Solution

Option (c):

In a typical recession, consumption falls, and the investment also decreases at more than the proportionate rate. Recession is a period in which most of the macroeconomic variables such as output, GDP, employment, and so on have decreasing values. Due to the lower income in this period, the consumption of the people reduces, and the investments also would be low. Thus, option (c) is correct.

Option (a):

In a typical recession, consumption will not rise. The consumption and investment decrease during recession, and the investment falls at more than the proportionate rate. Thus, option (a) is incorrect.

Option (b):

In a typical recession, consumption will not rise. The consumption and investment decrease during recession, and the investment falls not less than but more than the proportionate rate. Thus, option (b) is incorrect.

Option (d):

In a typical recession, consumption will fall. However, the fall in investment is not less than the proportionate rate. Thus, option (d) is incorrect.

Economics Concept Introduction

Recession: A recession is a significant decline in activity across the economy, lasting longer than a few months.

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Students have asked these similar questions

What is the effect of an increase in investment? When investment increases, A. aggregate demand increases and income increases. The increase in income induçes an increase in consumption expenditure so aggregate demand increases by more than the initial increase in investment B. aggregate demand increases and aggregate supply increases C. aggregate demand increases by an amount equal to the increase in investment O D. aggregate supply increases. The increase in aggregate supply is greater than the increase in investment because capital increases, which increases potential GDP Click to select your answer. MacBook Air DII F11 F12 888 F10 F9 吕0 F7 F8 F6 F5 F4 esc F2 F3 F1 # $ delete @ 7 8 1 2 3 4 P Y Q W E R %3D tab つ K S D F G A aps lock M V B ootion * 00 I くO

Which of the following will most likely cause movement along the consumption function? a. A change in tastes b. A change in consumers’ expectations c. A change in interest rates d. A change in disposable income

The fact that marginal propensity to consume (MPC) is larger than 0 means that a. Consumption will decrease following a decrease in current income b. Consumption will increase following a decrease current income c. Consumption will increase following a decrease in future income s. Consumption will decrease following as increase in current income

Answer 2

Question

Chapter 10, Problem 1QQ

To determine

Consumption and investment in recession.

Expert Solution & Answer

Answer to Problem 1QQ

Option (c) is the correct answer.

Explanation of Solution

Option (c):

In a typical recession, consumption falls, and the investment also decreases at more than the proportionate rate. Recession is a period in which most of the macroeconomic variables such as output, GDP, employment, and so on have decreasing values. Due to the lower income in this period, the consumption of the people reduces, and the investments also would be low. Thus, option (c) is correct.

Option (a):

In a typical recession, consumption will not rise. The consumption and investment decrease during recession, and the investment falls at more than the proportionate rate. Thus, option (a) is incorrect.

Option (b):

In a typical recession, consumption will not rise. The consumption and investment decrease during recession, and the investment falls not less than but more than the proportionate rate. Thus, option (b) is incorrect.

Option (d):

In a typical recession, consumption will fall. However, the fall in investment is not less than the proportionate rate. Thus, option (d) is incorrect.

Economics Concept Introduction

Recession: A recession is a significant decline in activity across the economy, lasting longer than a few months.

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Answer 3

Question

Chapter 10, Problem 1QQ

To determine

Consumption and investment in recession.

Expert Solution & Answer

Answer to Problem 1QQ

Option (c) is the correct answer.

Explanation of Solution

Option (c):

In a typical recession, consumption falls, and the investment also decreases at more than the proportionate rate. Recession is a period in which most of the macroeconomic variables such as output, GDP, employment, and so on have decreasing values. Due to the lower income in this period, the consumption of the people reduces, and the investments also would be low. Thus, option (c) is correct.

Option (a):

In a typical recession, consumption will not rise. The consumption and investment decrease during recession, and the investment falls at more than the proportionate rate. Thus, option (a) is incorrect.

Option (b):

In a typical recession, consumption will not rise. The consumption and investment decrease during recession, and the investment falls not less than but more than the proportionate rate. Thus, option (b) is incorrect.

Option (d):

In a typical recession, consumption will fall. However, the fall in investment is not less than the proportionate rate. Thus, option (d) is incorrect.

Economics Concept Introduction

Recession: A recession is a significant decline in activity across the economy, lasting longer than a few months.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 10, Problem 1QQ

To determine

Consumption and investment in recession.

Expert Solution & Answer

Answer to Problem 1QQ

Option (c) is the correct answer.

Explanation of Solution

Option (c):

In a typical recession, consumption falls, and the investment also decreases at more than the proportionate rate. Recession is a period in which most of the macroeconomic variables such as output, GDP, employment, and so on have decreasing values. Due to the lower income in this period, the consumption of the people reduces, and the investments also would be low. Thus, option (c) is correct.

Option (a):

In a typical recession, consumption will not rise. The consumption and investment decrease during recession, and the investment falls at more than the proportionate rate. Thus, option (a) is incorrect.

Option (b):

In a typical recession, consumption will not rise. The consumption and investment decrease during recession, and the investment falls not less than but more than the proportionate rate. Thus, option (b) is incorrect.

Option (d):

In a typical recession, consumption will fall. However, the fall in investment is not less than the proportionate rate. Thus, option (d) is incorrect.

Economics Concept Introduction

Recession: A recession is a significant decline in activity across the economy, lasting longer than a few months.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 10, Problem 1QQ

To determine

Consumption and investment in recession.

Expert Solution & Answer

Answer to Problem 1QQ

Option (c) is the correct answer.

Explanation of Solution

Option (c):

In a typical recession, consumption falls, and the investment also decreases at more than the proportionate rate. Recession is a period in which most of the macroeconomic variables such as output, GDP, employment, and so on have decreasing values. Due to the lower income in this period, the consumption of the people reduces, and the investments also would be low. Thus, option (c) is correct.

Option (a):

In a typical recession, consumption will not rise. The consumption and investment decrease during recession, and the investment falls at more than the proportionate rate. Thus, option (a) is incorrect.

Option (b):

In a typical recession, consumption will not rise. The consumption and investment decrease during recession, and the investment falls not less than but more than the proportionate rate. Thus, option (b) is incorrect.

Option (d):

In a typical recession, consumption will fall. However, the fall in investment is not less than the proportionate rate. Thus, option (d) is incorrect.

Economics Concept Introduction

Recession: A recession is a significant decline in activity across the economy, lasting longer than a few months.

Answer 6

Chapter 10, Problem 1QQ

To determine

Consumption and investment in recession.

Expert Solution & Answer

Answer to Problem 1QQ

Option (c) is the correct answer.

Explanation of Solution

Option (c):

In a typical recession, consumption falls, and the investment also decreases at more than the proportionate rate. Recession is a period in which most of the macroeconomic variables such as output, GDP, employment, and so on have decreasing values. Due to the lower income in this period, the consumption of the people reduces, and the investments also would be low. Thus, option (c) is correct.

Option (a):

In a typical recession, consumption will not rise. The consumption and investment decrease during recession, and the investment falls at more than the proportionate rate. Thus, option (a) is incorrect.

Option (b):

In a typical recession, consumption will not rise. The consumption and investment decrease during recession, and the investment falls not less than but more than the proportionate rate. Thus, option (b) is incorrect.

Option (d):

In a typical recession, consumption will fall. However, the fall in investment is not less than the proportionate rate. Thus, option (d) is incorrect.

Economics Concept Introduction

Recession: A recession is a significant decline in activity across the economy, lasting longer than a few months.

Answer 7

Chapter 10, Problem 1QQ

To determine

Consumption and investment in recession.

Answer 8

Expert Solution & Answer

Answer to Problem 1QQ

Option (c) is the correct answer.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Option (c):

In a typical recession, consumption falls, and the investment also decreases at more than the proportionate rate. Recession is a period in which most of the macroeconomic variables such as output, GDP, employment, and so on have decreasing values. Due to the lower income in this period, the consumption of the people reduces, and the investments also would be low. Thus, option (c) is correct.

Option (a):

In a typical recession, consumption will not rise. The consumption and investment decrease during recession, and the investment falls at more than the proportionate rate. Thus, option (a) is incorrect.

Option (b):

In a typical recession, consumption will not rise. The consumption and investment decrease during recession, and the investment falls not less than but more than the proportionate rate. Thus, option (b) is incorrect.

Option (d):

In a typical recession, consumption will fall. However, the fall in investment is not less than the proportionate rate. Thus, option (d) is incorrect.

Answer 12

Economics Concept Introduction

Recession: A recession is a significant decline in activity across the economy, lasting longer than a few months.

Answer 13

Ch. 10 - Prob. 1QQ Ch. 10 - Prob. 2QQ Ch. 10 - Prob. 3QQ Ch. 10 - Prob. 4QQ Ch. 10 - Prob. 5QQ Ch. 10 - Prob. 6QQ Ch. 10 - Prob. 1QR Ch. 10 - Prob. 2QR Ch. 10 - Prob. 3QR Ch. 10 - Prob. 4QR

Consumption and investment in recession.

Consumption and investment in recession.

Answer to Problem 1QQ

Explanation of Solution

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Chapter 10 Solutions