Hi guys
I'd like to ask some economic questions concerning C and its effects on Macro objectives--GDP growth,U/E,Trade Balance and Inflation.
Is the increase in Consumption always good for all of these Macro objectives? (both before and after the Economy reaches its full capacity)
Until now, I reckon that before the economy reaches its full capacity, the increased C is good as it encourages the employment rate of the country and thus contributes to GDP growth. Still, I cannot see how it affects Trade Balance and Inflation.
Also, after reaching its full capacity, I reckon it'd be no good to increase C as the economy would be running out of resources. At this stage, the economy might have to import more goods and services, withdrawing money from its circular flow and therefore hindering GDP growth. Yet I cannot see how this might affect U/E rate and Inflation.
Any thoughts?
Cheers xx
Is increased Consumption always good for the Economy?
I'd like to ask some economic questions concerning C and its effects on Macro objectives--GDP growth,U/E,Trade Balance and Inflation.
Is the increase in Consumption always good for all of these Macro objectives? (both before and after the Economy reaches its full capacity)
Until now, I reckon that before the economy reaches its full capacity, the increased C is good as it encourages the employment rate of the country and thus contributes to GDP growth. Still, I cannot see how it affects Trade Balance and Inflation.
Also, after reaching its full capacity, I reckon it'd be no good to increase C as the economy would be running out of resources. At this stage, the economy might have to import more goods and services, withdrawing money from its circular flow and therefore hindering GDP growth. Yet I cannot see how this might affect U/E rate and Inflation.
Any thoughts?
Cheers xx