Question

In your own words. What is more appropriate to help stimulate economic growth; consumption or investment...

In your own words. What is more appropriate to help stimulate economic growth; consumption or investment demand? What sector do you think our economy should look at stimulating, consumers or businesses? Explain your reasoning using the concepts of aggregate demand and supply.

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Answer #1

This is a bit tricky question. We know that both consumption and investment demand are indispensable for economic growth. Thus both are complementary rather than substitutes. Choosing the best between the two is like arguing who came first : egg or hen. But still from some evidences we can come to a solid conclusion, which is given as under:

we stant Jear ning about econo classical concept Scuys Jow, which states theu dupply creautes its own clem andl. hs mea nr theople ges sa ses the quali thuy tend to develop a habbit and teuste ond this inoeased conuompion, mose anel me e invedment is mode in the secroa. taute Due to improved tu te and AS poe ferente, the A bom E to Er, whch is at a higher puce and Aue to inoreaedl clemand the pstoduter tend to ernbloc, more lubo un,The Thus inoresves the sreal Condition of labous and edlutes un emb loimen Thuu both consomption ond consumees Wi. This imbsoves dhe needs to be sti mulated

Hope this answer solves your purpose. Do give it a thumbs up. All the best.

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