Question

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.

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 thet no mattry how much the produ cess uoduot will be sold beceuus e psuoduste , eve to stealise that the house hold nevor consumes aul of the feacton Jncome, bu saves some cuet os the exegenies o time. The US witne ssed the Gsreat debsie ssion 193as w hich bsrough into igh the whole contept op govem ment intevenbions and that, iks net the &upp냉씨hich CHeutes the demand, bad, bhab the dlemand cHeautes its own su py Thus we come to a Jogicol conclusion tha Cos omption is the most impostan gi mulond ox econonuic gyowth because it auwto maicall bsungs into ploy, the investment demand Since it is said tha nece si g is the mother au Inventions, the consumption (moeoves clengand) Jeads to econonic qrouth. ue to the demand on a cevłeun produo, the inv esdment s madte in thot See ton when

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