Answer to Question #138047 in Macroeconomics for James

Question

Using the Simple Keynesian Model discuss 3 things that could have an effect on the level of investments coming into South Africa.

Answer 1

these things that could have an effect on the level of investments coming into South Africa.

1.Consumption can change for a number of reasons, including movements in income, taxes, expectations about future income, and changes in wealth levels.

2.Government spending and taxes are determined by political considerations.

3.An inflationary gap exists when equilibrium is at a level of output above potential GDP.

4.Exports and imports change according to relative growth rates and prices between two economies.