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Unformatted text preview: Investment spending depends on: 1. Profits 2. Interest rate 3. Tax laws 4. Oil prices 5. Pollution regulations 6. Price controls 7. Capacity utilization (expansion) 8. Biz-con 9. Consumer protection laws (i.e. airbags) 10. Worker protection rights (i.e. OSHA) 11. Corporate debt 12. Vacancy rates Investment is volatile (unlike consumer spending). Government decisions are based more so on politics than economics Net exports depends on 1. exchange rate 2. our trade partners economies 3. protectionism (trade barriers) Inflation Inflation is a widespread rise in prices Prices go up because of- economic growth- government policy (i.e. sales tax increase)- Outside inflation Growth inflation: Production growth means more need, which causes shortages This drives up prices for physical and human capital...
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- Winter '08