Explain the concept of Business Cycles by denoting demand shock and/or consumer confidence.

GDP are independent of price. Discuss.

Question 2
In a closed economy, aggregate consumption (C) depends on the aggregate output level (or aggregate DI) but aggregate investment (Ig) does not. Explain why?

Question 3
Briefly explain, how each of the following variable affects GDP (in the expenditure method)
(i) Consumption (C )
(ii) Investment (I)
(iii) Government (G)

Question 4
We learned in class that, although all imports (M) are deducted when calculating GDP by using expenditure method, it does not necessarily mean that an increase in imports reduces the size of GDP. Sometimes imports can increase the size of GDP significantly. Explain

Question 5
Explain the concept of Business Cycles by denoting demand shock and/or consumer confidence.

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