GDP and the U.S. Economy Essay

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Total Length: 990 words ( 3 double-spaced pages)

Total Sources: 4

Page 1 of 3

1

260000

2009

93.7

275000

2010

89.6

290000

2011

91

310000

2012

88

327000

2013

Israel

Government Spending

Consumer Goods

Year

35.1

96000

2009

35.4

103000

2010

44.8

109000

2011

41

111000

2012

39.3

114000

2013

Question 2C

With so much conflict continuing around the world, one can assume that government spending may begin to increase. From that perspective, they can then also be assumed that nonresidential fixed investment may also continue to go down. This is based on the qualitative relationship the two variables have with one another.

Question 3A & B

The last two quarters saw a decrease in nonresidential fixed investments. In fact, the rate dropped to about 3%, on average (Mataloni, 2013). This comes as a reaction to the recent increase seen in government spending over more recent quarters, compared to the last couple years average rates.

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There is a clear relationship between levels of nonresidential investments and levels of government spending. In fact, the research suggests that "nonresidential fixed investment that were partly offset by negative contributions from federal government spending and state and local spending" (Mataloni, 2013).The higher the levels of government spending essentially means a clear decrease for nonresidential fixed investment levels, according to the principles under the production possibilities curve. Yet, at the same time when there are dips in nonresidential fixed investment, federal spending has to increase and pick up the slack to meet budget demands. As such, federal spending increases when levels of nonresidential fixed investment get to low. Thus, with the decrease of 3% in rates of nonresidential fixed investments, it could be assumed using.....

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