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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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.

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 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.

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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.