Which component of expenditure consumption or investment, appears to be the most volatile? Is this consistent across the countries sampled?

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Visit the Penn World Tables web site, linked from the Mc Taggart, Findlay , Parkin home page and obtain data on consumption and investment as a share of real GDP for Australia, Canada ,China , Gambia , South Africa , and The United States since 1960 . By making the appropriate graphs, answer the following questions:

Which component of expenditure consumption or investment, appears to be the most volatile? Is this consistent across the countries sampled?

2. What are the key differences in the behavior of consumption and investment between developed countries and less developed countries?

Introduction:

Consumption and Investment are the two most important components of Aggregate Demand or Aggregate Expenditure.

Aggregate Expenditure = Consumption + Investment + Government Expenditure on goods and services + Net Exports.

Consumption expenditure, measured in the Australian National Accounts as private final consumption expenditure, is the value of consumption goods and services bought by households. Some components of a household's consumption expenditure and savings increase as its income increases; such components are called induced consumption expenditure. Those that are independent of income are called autonomous consumption expenditure. (McTaggart, Findlay, Parkin ,1999, p.23-6)

Income and Consumption are positively related but not in the same proportion. Consumption expenditure is mostly influenced by factors like -disposable income, expected future income, wealth and interest rates. Consumption expenditure is a function of real GDP. It is one of the most stable and the largest component of aggregate expenditure.
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Investment as an economic activity is taken, as in to increase output in the longer-run. It includes tangible capital and intangible (Nordhaus, 1998,p.748). Investment is independent of real GDP therefore it is an autonomous expenditure. It is also one of the most volatile components of aggregate expenditure. Investment and net exports fluctuate the most in aggregate expenditure. Out of consumption and investment; investment appears to be more volatile than consumption. Dependency of investment on real interest rates and profit expectations makes investment the most volatile factor.

Now studying the relation-ship between the components of Expenditure

i.e., ...

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