Q: What determines the slope of a consumption function?
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Q: Consider the two-period Neoclassical growth model seen in class. Suppose that income is measured in…
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Q: Question: According to the life-cycle model, when wealth and income increase together in the long…
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Q: How do the life-cycle and permanent-income hypotheses resolve the seemingly contradictory pieces of…
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Q: onsider a two period model of a small n economy. Being careful to state any mptions you make, derive…
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Q: Determinant Consumption Income (decrease) (Increase) Assets held (increase in)…
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Q: Role of investment function
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Q: How does the life cycle and the permanent income hypothesis resolve the seemingly contradictory…
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Q: How do you explain why investment falls as interest rate rises
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Q: What are three insights you gained from studying the microfoundations of theIS curve?
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Q: what is the relationship between investment and saving in the cyclical flow of the economy
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Q: State the main properties of keynesian consumption function i need three properties.
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Q: Exercise 1 (45%): In the textbook, Model I is the least complicated way to define the relations in…
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Q: Who gave the relative income hypothesis of consumption?
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Q: If the MPC is .75 and disposable income is $100, then
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Explain the criticism of life cycle theory of consumption and highlight the importance of economic models
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- How do the life-cycle and permanent-income hypotheses resolve the seemingly contradictory pieces of evidence regarding consumption behavior?The life cycle model of consumption argues that people consume and save in different proportions as they age. Seniors tend to consume more than save as their lives adjust to the realities of old age. Assuming the hypothesis is true, how would the aging of the very large baby boomer generation affect consumption and income?explain the main macroeconomic objectives that economists use to assess theperformance of an economy
- Discuss the lifecycle income hypothesis theory of consumption and explain its applicability in the Kenyan context.Derive the investment function (using the neoclassical model of investment). Explain how investment responds to changes in Marginal Product of Capital and interest rate.Use an ISLM model to analyse the effects of an increase in government expenditures onthe interest rate and GDP
- please solve these macroeconomic theory questionsExplain how the income from production is distributed to labor and capital according to the neoclassical theory of distribution.Consider the intertemporal model of consumption studied in class, with two possible periods. Consider initially that an individual is a borrower. If the interest rate increases: (a)The individual will never become a saver. (b)The individual will always remain a borrower. (c)The individual will be worse off, provided she remains a borrower. (d)The individual can be better off, but only if she becomes a saver. Both c and d.
- Multiple choice question and give a short explanation about your answer: According to the Fisher model does a change in the interest rate changes aconsumer’s behaviour if he/she is a borrower? a. a consumer keeps consumption equal in both periods trying to smooth it.b. second-period consumption might rise or fall depending on income orsubstitution effect variations.c. a consumer increases consumption in the first period.d. no effect at all.Summarize the main implications of the neoclassical consumption model forconsumption and saving.(Table: Individual and Aggregate Consumption Functions) According to the tableIndividual and Aggregate Consumption Functions, autonomous consumption in theaggregate consumption function is: