World Moviing Towards Recession

Group 7 sec 1

Comparative data for Marginal Propensity |

  | US | India |

  | % | $ Trillion |   | % | $ Trillion | MP |

2007-08 |   | 14.40 |   |   | 1.22 |   |

C | 70% | 10.08 |   | 59% | 0.72 |   |

I | 15% | 2.16 |   | 34% | 0.42 |   |

G | 20% | 2.88 |   | 12% | 0.15 |   |

X-M | -5% | -0.72 |   | -5% | -0.06 |   |

  |   | |   |   | |   |

2008-09 |   | 14.10 |   |   | 1.36 |   |

C | 71% | 10.01 | 0.23 | 57% | 0.78 | 0.39 |

I | 11% | 1.55 | 2.03 | 37% | 0.50 | 0.64 |

G | 21% | 2.96 | -0.27 | 12% | 0.16 | 0.12 |

X-M | -3% | -0.42 | -0.99 | -6% | -0.08 | -0.15 |

  |   | |   |   | |   |

2009-10 |   | 14.70 |   |   | 1.68 |   |

C | 71% | 10.44 | 0.71 | 56% | 0.94 | 0.52 |

I | 12% | 1.76 | 0.36 | 35% | 0.59 | 0.27 |

G | 20% | 2.94 | 0.07 | 12% | 0.20 | 0.12 |

X-M | -3% | -0.44 | 0.06 | -4% | -0.07 | 0.04 |

  |   | |   |   | |   |

2010-11 |   | 15.09 |   |   | 1.85 |   |

C | 70% | 10.56 | 0.32 | 57% | 1.05 | 0.67 |

I | 16% | 2.41 | 1.67 | 36% | 0.67 | 0.46 |

G | 17% | 2.57 | -0.96 | 12% | 0.22 | 0.12 |

X-M | -3% | -0.45 | -0.03 | -5% | -0.09 | -0.15 |

Country | 2008-2009 | 2009-2010 |

India | MPC | 0.391248 |

MPI | 0.638128 |

MPG | 0.209376 |

| |

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MPT | (0.165631) |

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| MPC | (2.1081) |

MPI | 0.265794 |

MPG | 0.12 |

| |

| |

MPT | 0.668413 |

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US | MPC 0.23 MPI = 2.03 MPG -0.27 MPT = -0.99 | MPC = 0.71 MPI = 0.36 MPG =0.07 MPT = 0.06 |

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* India is a consumption driven economy. From the MPC values in 2008 and 2009 we can conclude that the ability of the consumer to spend has reduced , which is due to effect of world 2008 financial crisis. The effect of the US and Europe crisis , is the main factor for this reduction , which is an indicator of world moving towards double dip recession.

* India's MPI has also reduced , which suggests that government is spending...