« previous next »

Author Question: How consistent is the Keynesian consumption function with the random walk hypothesis? What will ... (Read 36 times)

mrsjacobs44

  • Hero Member
  • *****
  • Posts: 500
on: Jun 30, 2018
How consistent is the Keynesian consumption function with the random walk hypothesis?
 
  What will be an ideal response?

Question 2

In the New Keynesian model, the stabilization effects of fiscal and monetary policy are different because
 
  A) the effects on the composition of output are different.
  B) monetary policy does not work in a liquidity trap, but fiscal policy does.
  C) monetary policy affects spending on goods indirectly; fiscal policy affects spending directly.
  D) all of the above.


joshbk44

  • Sr. Member
  • ****
  • Posts: 340
Reply #1 on: Jun 30, 2018
Answer to Question 1

For changes in aggregate income that are unexpected, the Keynesian consumption function captures the impact on current consumption. If economic behavior is guided by rational expectations, and there are no surprises, then aggregate income reflects all available information so, again, the Keynesian consumption function is a good model.

Answer to Question 2

D


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question

mrsjacobs44

  • Hero Member
  • *****
  • Posts: 500
Reply #2 on: Jun 30, 2018
Thank you :)


joshbk44

  • Sr. Member
  • ****
  • Posts: 340
Reply #3 on: Jun 30, 2018
Happy to help you


« previous next »
 

Did you know?

All patients with hyperparathyroidism will develop osteoporosis. The parathyroid glands maintain blood calcium within the normal range. All patients with this disease will continue to lose calcium from their bones every day, and there is no way to prevent the development of osteoporosis as a result.

Did you know?

Despite claims by manufacturers, the supplement known as Ginkgo biloba was shown in a study of more than 3,000 participants to be ineffective in reducing development of dementia and Alzheimer’s disease in older people.

Did you know?

Your skin wrinkles if you stay in the bathtub a long time because the outermost layer of skin (which consists of dead keratin) swells when it absorbs water. It is tightly attached to the skin below it, so it compensates for the increased area by wrinkling. This happens to the hands and feet because they have the thickest layer of dead keratin cells.

Did you know?

There can actually be a 25-hour time difference between certain locations in the world. The International Date Line passes between the islands of Samoa and American Samoa. It is not a straight line, but "zig-zags" around various island chains. Therefore, Samoa and nearby islands have one date, while American Samoa and nearby islands are one day behind. Daylight saving time is used in some islands, but not in others—further shifting the hours out of sync with natural time.

Did you know?

More than 50% of American adults have oral herpes, which is commonly known as "cold sores" or "fever blisters." The herpes virus can be active on the skin surface without showing any signs or causing any symptoms.

Structure and basic function of a typical vertebrate neuron and associated glial cells. Structure and basic function of a typical vertebrate neuron and associated glial cells.
Hematuria. An analysis of urine is performed to evaluate kidney function. In this illustration, the Hematuria. An analysis of urine is performed to evaluate kidney function. In this illustration, the
How to combine and sketch transformations of a sinusoidal function (Question 2) (y=a*sin⁡b(x−c)+d) How to combine and sketch transformations of a sinusoidal function (Question 2) (y=a*sin⁡b(x−c)+d)
A Hypothesis Can Lead to a Scientific Consensus A Hypothesis Can Lead to a Scientific Consensus
Let f be a real function with domain R. Suppose that for each ǫ > 0, there is a continuous ... Let f be a real function with domain R. Suppose that for each ǫ > 0, there is a continuous ...
Prove that each of the following real functions f has a discontinuity. For each function, ... Prove that each of the following real functions f has a discontinuity. For each function, ...
Video: ADH and the arterioles, kidneys, sweat glands and the Atrial natriuretic peptide (ANP)

For a complete list of videos, visit our video library