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A large decrease in Australia's share market may cause: on 15 answered out of 1
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A large decrease in Australia's share market may cause: on 15 answered out of 1.0 question Select one: a. a decrease in consumption. b. a large increase in economic growth c. an increase in consumption to compensate. d. an increase in investment to compensate. Which of the following expenditures would be included in GDP for this year? 16 nswered ut of 1.0 uestion Select one: a. The purchase of a new car. o b. All of the choices here would be included in GDP O c. The purchase of a new tyre by a car manufacturer for a new car d. The purchase of an old car
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When consumption expenditure is less than-----, saving takes place and --- rises. Fill in the blanks. Wealth; net income Net income; wealth Net income; depreciation Investment expenditure; wealth
Expert Solution
1 1) Large decrease in stock market will reduce overall wealth of investors and reduce their willingness to spend in the market. It will reduce consumption and investment which will further lower the GDP level.
Option A is incorrect
2) Option A and C is correct as purchase of new car and tyre would be included in GDP
Option D is incorrect because purchase of old car would result in double counting of the same good in GDP which will inflate the numbers of GDP.
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Option B.
- When consumption expenditure is less than Net income, then we can say that the saving is positive.
- This is because when a person spends a less portion of his disposable income, then it means that he has saved more amount than he has spent.
- When saving Increases, the wealth also increases over time. But an increase in wealth may affect the present and future consumption.
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