Question
During economic expansions economists, investors and policy makers are always watching for signals of the next recession. Signals could come from movements in planned spending
During economic expansions economists, investors and policy makers are always watching for signals of the next recession. Signals could come from movements in planned spending and its role in determining equilibrium. First, explain why, in theory, a decline in planned spending could be seen as a sign of coming weakness in actual GDP and the economy. Once done, let's look at the information that may be contained in the details of the four components of GDP - C, I, G, NX. Explain which of the subcomponents, or parts, of these four general categories would most likely be the focus of the analysis of how the economy is doing, and why. Lastly, is the importance of each subcomponent the same for all countries?
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