Ahead of Canadian GDP out this week the OECD said weak foreign demand was causing the export-dependent economy to slow and may mean further stimulus from the central bank. Last week Peter Ruddick for Dukascopy TV talked to Dr. John Hancock, from the World Trade Organisation and former advisor to the Canada trade minister, about prospects for the Canadian economy and the Canadian Dollar after positive consumer spending figures.
Autonomous consumption is represented by the vertical intercept, while the slope of the line is determined by the marginal propensity to consume. The marginal propensity to consume is less than one indicating that an increase in income increases consumer spending, but the increase in consumer spending is less than the increase in income. A hunderd rand increase in income increases consumption spending with less than a hunderd rand. The slope of the consumption curve is equal to the change in consumption divided by the change in income
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