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The Impact of an Increase Consumption Expenditures, Investments, Disposable Income and Exports on the GDP Growth

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The model is significant at 5% level of significance [F (1, 72) = 23,469.73, p< 0.001]. The coefficient for disposable income is also significant [t (72) = 153.2, p< 0.001]. This means that a billion dollar increase in disposable income leads to 5.55 billion dollar increase in GDP. The model is significant at 5% level of significance [F (1, 72) = 77.16, p< 0.001]. The coefficient for disposable income is also significant [t (72) = -8.78, p< 0.001]. This means that a billion dollar decrease in net exports leads to 19.66 billion dollar increase in GDP.

Several factors have impacts on the GDP and they include; consumptions, investments, disposable income, exports among others. To determine the impact of an increasing consumption, investment, disposable income and exports (all in Billion Dollars) on the GDP growth. From the results, investments and disposable income have a statistically significant impact on GDP while consumption and net exports are not significant at 5% level of significance. Considering each IV alone Vs GDP, then it is significant at 5% level of significance. From the results also, if consumption increases by a billion dollar, the GDP decreases by. 13 billion dollars.

This is true if the impact of investments, disposable income, and net exports is held constant. A billion dollar increase in investments leads to. 931 billion dollars increase in GDP if the impact of consumption, disposable income, and net exports is held constant. Further, a billion dollar increase disposable income leads to 1.26 billion dollars increase in GDP if the impact of consumption, investments and net exports is held constant. Again, a billion dollar increase in net exports leads to. 32 billion dollars increase in GDP if the impact of consumption, investments and disposable income is held constant.

99.8% of the total variation in GDP over the years is explained by the full model [R-squared = . 998]. Investments and disposable income were found to be significant while consumption and next exports were found not to be significant at 5% level of significance with p> .05 (Freed, M. et al. 1991).

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