a) Use an appropriate diagram, to explain how the Permanent Income Theory of Consumption reconciles the results of cross-section and time series estimate of the Keynesian aggregate consumption function. (b) With the help of a diagram, explain the effect of an increase in nominal income on interest rate

a) Use an appropriate diagram, to explain how the Permanent Income Theory of Consumption reconciles the results of cross-section and time series estimate of the Keynesian aggregate consumption function. (b) With the help of a diagram, explain the effect of an increase in nominal income on interest rate

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter10: Keynesian Macroeconomics And Economic Instability: A Critique Of The Self Regulating Economy

Section: Chapter Questions

Problem 7QP

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