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lurielbank lurielbank
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4 years ago
Recall the Application about energy price uncertainty and its impact on investment spending and GDP growth to answer the following question(s). Increases in oil prices can lead to a drop in GDP. However, uncertainty about oil prices is also an important factor. The volatility of oil prices creates uncertainty for firms making investment decisions, and adversely affects GDP growth.


This application addresses the idea that

▸ financial intermediaries facilitate investment spending.

▸ investment spending is the least stable component of GDP.

▸ consumer spending is the most stable component of GDP.

▸ government spending is needed to pull an economy out of a recession.
Textbook 
Macroeconomics: Principles, Applications and Tools

Macroeconomics: Principles, Applications and Tools


Edition: 7th
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WooWoo
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4 years ago
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#2
4 years ago
Recall the Application about energy price uncertainty and its impact on investment spending and GDP growth to answer the following question(s). Increases in oil prices can lead to a drop in GDP. However, uncertainty about oil prices is also an important factor. The volatility of oil prices creates uncertainty for firms making investment decisions, and adversely affects GDP growth.


According to this Application, the volatility of energy prices can contribute to uncertainty in the economy. An increasingly uncertain future will tend to cause firms to

▸ wait for significant GDP growth before reducing investments.

▸ continue with a stable flow of investment spending so as not to get trapped by a downturning economy.

▸ rely on the government to make their investment decisions for them.

▸ delay their investment decisions.
wrote...
#3
4 years ago
delay their investment decisions.
wrote...
#4
4 years ago
Recall the Application about energy price uncertainty and its impact on investment spending and GDP growth to answer the following question(s). Increases in oil prices can lead to a drop in GDP. However, uncertainty about oil prices is also an important factor. The volatility of oil prices creates uncertainty for firms making investment decisions, and adversely affects GDP growth.


According to this Application, if the volatility of energy prices led to expectations of declining real GDP, investment spending at that time would tend to decrease. This relationship between the decrease in investment spending and the expected decline in real GDP would be expressed by the

▸ liquidity principle.

▸ real-nominal principle.

▸ present value theory.

▸ accelerator theory.
wrote...
#5
4 years ago
accelerator theory.
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