This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Explain why current consumption might change even if current income does not change. What will be ... (Read 100 times)

lilldybug07

  • Hero Member
  • *****
  • Posts: 546
on: Jun 30, 2018
Explain why current consumption might change even if current income does not change.
 
  What will be an ideal response?

Question 2

Explain in detail what effect a Fed sale of bonds will have on: (1 ) the LM curve; and (2 ) the IS curve.
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

AngeliqueG

  • Sr. Member
  • ****
  • Posts: 343
Reply #1 on: Jun 30, 2018
Answer to Question 1

C also depends on wealth. If any of the determinants of wealth change, without current disposable income changing, individuals will change current consumption. In short, there are other determinants of current consumption.

Answer to Question 2

A Fed sale of bonds will cause a reduction in H and a reduction in the money supply. This will cause an excess demand for money and the interest rate must increase to restore money market equilibrium. The LM curve will shift up as a result of this to reflect the now higher interest rate. The IS curve does not shift as a result of this. We would simply observe a movement along the IS curve.


lilldybug07

  • Member
  • Posts: 546
Reply 2 on: Jun 30, 2018
:D TYSM

Chelseyj.hasty

  • Member
  • Posts: 319
Reply 3 on: Yesterday
Excellent

« previous next »
 

Did you know?

Blood in the urine can be a sign of a kidney stone, glomerulonephritis, or other kidney problems.

Did you know?

The first oncogene was discovered in 1970 and was termed SRC (pronounced "SARK").

Did you know?

Hip fractures are the most serious consequences of osteoporosis. The incidence of hip fractures increases with each decade among patients in their 60s to patients in their 90s for both women and men of all populations. Men and women older than 80 years of age show the highest incidence of hip fractures.

Did you know?

Looking at the sun may not only cause headache and distort your vision temporarily, but it can also cause permanent eye damage. Any exposure to sunlight adds to the cumulative effects of ultraviolet (UV) radiation on your eyes. UV exposure has been linked to eye disorders such as macular degeneration, solar retinitis, and corneal dystrophies.

Did you know?

There are more nerve cells in one human brain than there are stars in the Milky Way.

Distance from Initial Change in Membrane Potential vs. Voltage Change Relative to Initial Change Distance from Initial Change in Membrane Potential vs. Voltage Change Relative to Initial Change
Ten Leading Causes of Death in Low-Income Countries, 2008 Ten Leading Causes of Death in Low-Income Countries, 2008
Mechanisms to Explain the Effects of Massage Mechanisms to Explain the Effects of Massage
Historical Climate Change "تغير المناخ التاريخي" Historical Climate Change "تغير المناخ التاريخي"
Capital’s Share of Income in a Cross-Section of Countries Capital’s Share of Income in a Cross-Section of Countries
Magnetic Force on a Current Carrying Conductor Magnetic Force on a Current Carrying Conductor
Video: Blood Flow Through the Kidneys

For a complete list of videos, visit our video library