« previous next »

Author Question: How consistent is the Keynesian consumption function with the random walk hypothesis? What will ... (Read 93 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?

Amphetamine poisoning can cause intravascular coagulation, circulatory collapse, rhabdomyolysis, ischemic colitis, acute psychosis, hyperthermia, respiratory distress syndrome, and pericarditis.

Did you know?

Although puberty usually occurs in the early teenage years, the world's youngest parents were two Chinese children who had their first baby when they were 8 and 9 years of age.

Did you know?

The calories found in one piece of cherry cheesecake could light a 60-watt light bulb for 1.5 hours.

Did you know?

Adult head lice are gray, about ? inch long, and often have a tiny dot on their backs. A female can lay between 50 and 150 eggs within the several weeks that she is alive. They feed on human blood.

Did you know?

The highest suicide rate in the United States is among people ages 65 years and older. Almost 15% of people in this age group commit suicide every year.

Roots of the keystone species hypothesis: does a higher proportion of predators in diverse communiti Roots of the keystone species hypothesis: does a higher proportion of predators in diverse communiti
Schematic representations of (a) random, (b) alternating, (c) block, and (d) graft copolymers. Schematic representations of (a) random, (b) alternating, (c) block, and (d) graft copolymers.
Per capita annual alcohol consumption (2005) Per capita annual alcohol consumption (2005)
How to determine if a table of values represents a function How to determine if a table of values represents a function
Periodic Function Periodic Function
Mitochondrial structure and function Mitochondrial structure and function
Video: Covalent bonds - role in the body

For a complete list of videos, visit our video library