Brazil Consumption
Brazil – Consumption Analysis
General Analysis
The consumption and GDP data being considered for Brazil relates to the period 1996-2005. [1]The Consumption and National Income in Brazil during this period have risen in the same proportion approximately. The National Income and Consumption have been on a constant rise in the decade being analysed.
The National Income of Brazil has grown at a Compounded Annual Growth Rate (CAGR) of 3.08%, while the Consumption of Brazil has grown at a CAGR of 2.98%.
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Consumption Function
On the basis of regression carried out between National Income and Consumption of Brazil, the consumption function can be written as
Consumption = Constant + MPC * National Income
Consumption = 78299.0234375 + 0.76072871685028 * National Income
Marginal Propensity to Consume
The Marginal Propensity across the period has been calculated using the Consumption Function as mentioned above. The National Income and Consumption data has been used for the respective year for this calculation.
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The MPC for all period has been between 0 and 1 and has hovered around the 0.76 mark which means that for every extra Brazilian Real earned, on an average, the consumer spends 0.76 of it. MPC measures the sensitivity of consumption with respect to a change in National Income.
This is in agreement to consumption function which is central to the Keynes theory of Economic Fluctuations that says the value of MPC is between 0 and 1.
Average Propensity to Consume
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Even though the National Income has been rising over the period, the Average Propensity to Consume has been declining during this time. This upholds the consumption function which is central to the Keynes theory of Economic Fluctuations which says that APC falls as the National Income rises. While National Income has risen at a CAGR of 3.08% during the period, the APC has decreased by 0.29% (CAGR).
Consumption – My Personal Understanding
When
General Analysis
The consumption and GDP data being considered for Brazil relates to the period 1996-2005. [1]The Consumption and National Income in Brazil during this period have risen in the same proportion approximately. The National Income and Consumption have been on a constant rise in the decade being analysed.
The National Income of Brazil has grown at a Compounded Annual Growth Rate (CAGR) of 3.08%, while the Consumption of Brazil has grown at a CAGR of 2.98%.
[pic]
Consumption Function
On the basis of regression carried out between National Income and Consumption of Brazil, the consumption function can be written as
Consumption = Constant + MPC * National Income
Consumption = 78299.0234375 + 0.76072871685028 * National Income
Marginal Propensity to Consume
The Marginal Propensity across the period has been calculated using the Consumption Function as mentioned above. The National Income and Consumption data has been used for the respective year for this calculation.
[pic]
The MPC for all period has been between 0 and 1 and has hovered around the 0.76 mark which means that for every extra Brazilian Real earned, on an average, the consumer spends 0.76 of it. MPC measures the sensitivity of consumption with respect to a change in National Income.
This is in agreement to consumption function which is central to the Keynes theory of Economic Fluctuations that says the value of MPC is between 0 and 1.
Average Propensity to Consume
[pic]
Even though the National Income has been rising over the period, the Average Propensity to Consume has been declining during this time. This upholds the consumption function which is central to the Keynes theory of Economic Fluctuations which says that APC falls as the National Income rises. While National Income has risen at a CAGR of 3.08% during the period, the APC has decreased by 0.29% (CAGR).
Consumption – My Personal Understanding
When
References: • http://data.un.org/Data.aspx?d=SNA&f=group_code%3a102%3bitem_code%3a7 • http://www.amosweb.com • John Maynard Keynes – Consumption Function ----------------------- [1] http://data.un.org/Data.aspx?d=SNA&f=group_code%3a102%3bitem_code%3a7