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In the Real Business Cycle model, what is the effective investment and the equilibrium investment?
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- 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?Suppose investment is a function of income. Explain the impact of an increase in income on the business cycle of the economy.Explain the difference of income and employment in an economy with the help of complete classical model?
- 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 ?The period during which real output is growing during a business cycle is called:Which of the following is correct?a. Over the business cycle consumption fluctuates more than investment.b. Economic fluctuations are easy to predict.c. During recessions sales and profits tend to fall.d. Because of government policy the U.S. has suffered no recessions in the last 25 years.
- Which of the following will NOT lead to an increase in real GDP? A. On average, people in a country decide to increase the number of hours they work by 5%. B. Spending on homeland security increases in response to a terrorist attack. C. The price level and nominal GDP increase by 10%. D. Due to lower interest rates by the Fed investors increase their investmenSuppose most business executives expect a slowdown in the economy (slower sales growth for their firm). How might that affect the economy?How does the life cycle and the permanent income hypothesis resolve the seemingly contradictory pieces of evidence regarding consumption behaviour?
- When real GDP declines during a recession, what typically happens to consumption, investment, and the unemployment rate?When real GDP declines during a recession, what typically happens to consumption, investment, and the unemployment rate? During an economic boom, what happens to these variables?When real GDP declines during a recession, what typically happens to consumption, investment, and the unemployment rate? (Macroeconomic field of question)