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- In the Real Business Cycle model, what is the effective investment and the equilibrium investment?Given this model, what would be the new equi8librium level of income were Investment spending to decline by 50?How does a change in the interest rate affect aggregate investment ? What if firms prefer to pay for investment spending out of retained earnings ? Does a change in the interest rate still affect aggregate investment Does the amount of government spending in an econ omy respond directly to changes in aggregate income , wealth , or interest rates ? Does it respond indirectly to changes in these variables ?
- what might explain the differences seen in the role of consumption and investment during the recession and recovery phases of the business cycle? what about the period before the recession?Explain it correctly not copy paste Q)In the Real Business Cycle model, what is the effective investment and the equilibrium investment?Macroeconomic uncertainity and investment, discuss.
- How does this very short-term nominal interest rate, used only betweenbanks, have the power to shake fnancial markets, alter medium-term investmentplans, and change GDP in the largest economy in the world?How does the life cycle and the permanent income hypothesis resolve the seemingly contradictory pieces of evidence regarding consumption behaviour?How is it possible for investment spending to increase even in a period in which the real interest rate rises?
- Using the real intertemporal model with investment, predict the effects on employment and the real wage, investment and the real interest rate, consumption, and output following a temporary increase in government spending. For each variable explain why the temporary increase in government spending will have the predicted effect.Using a suitable graph, what is the effect on national income if people increase autonomous saving?Explain the Keynesian, saving-consumption relationship, and interpret consumption and saving functions on a single graph.