Based on the dataset sourced from Central Bank of Nigeria Statistical Bulletin, income (proxied by gross domestic product), interest rate, government revenue and inflation rate were the key determinants of aggregate consumption expenditure considered in this study.
What is the aggregate consumption?
First, aggregate consumption determines aggregate saving, because saving is defined as the portion of income that is not consumed. Because aggregate saving feeds through the financial system to create the national supply of capital, it follows that aggregate consumption…
What determines the level of aggregate output in an economy?
Macroeconomics examines the economy as a whole by focusing on a country’s aggregate output of final goods and services, total income, aggregate expenditures, and the general price level. The interaction of aggregate demand and aggregate supply determines the level of GDP as well as the general price level.
What determines the level of consumption expenditure?
The level of consumption that takes place in an economy at a given point depends upon the purchasing power of an economy which depends upon the net disposable income of an economy which in the income spend on consumption after adjusting savings from it.
Why aggregate consumption is good for the economy?
Consumption, in economics, the use of goods and services by households. Because aggregate saving feeds through the financial system to create the national supply of capital, it follows that aggregate consumption and saving behaviour has a powerful influence on an economy’s long-term productive capacity.
How are objective factors related to aggregate consumption?
Objective factors are also known as “economic factors” which are subject to change in the short run. Objective or economic factors are also quantifiable. On the other hand, subjective factors are psychological and, hence, are not subject to estimation. In addition, structural factors also influence aggregate consumption spending.
How does change in aggregate expenditures affect consumption?
Any change in aggregate demand causes a change in income, and a change in income causes a change in consumption—which changes aggregate demand and thus income and thus consumption. The aggregate expenditures model will help us to unravel the important relationship between consumption and real GDP.
What are the determinants of the aggregate demand curve?
In this chapter, we will examine the determinants of consumption and introduce a new model, the aggregate expenditures model, which will give insights into the aggregate demand curve.
How are aggregate expenditures related to real GDP?
The aggregate expenditures model will help us to unravel the important relationship between consumption and real GDP. Explain and graph the consumption function and the saving function, explain what the slopes of these curves represent, and explain how the two are related to each other.
