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 94 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
Wow, this really help

steff9894

  • Member
  • Posts: 337
Reply 3 on: Yesterday
Great answer, keep it coming :)

« previous next »
 

Did you know?

This year, an estimated 1.4 million Americans will have a new or recurrent heart attack.

Did you know?

Sildenafil (Viagra®) has two actions that may be of consequence in patients with heart disease. It can lower the blood pressure, and it can interact with nitrates. It should never be used in patients who are taking nitrates.

Did you know?

More than 20 million Americans cite use of marijuana within the past 30 days, according to the National Survey on Drug Use and Health (NSDUH). More than 8 million admit to using it almost every day.

Did you know?

Human kidneys will clean about 1 million gallons of blood in an average lifetime.

Did you know?

Drug abusers experience the following scenario: The pleasure given by their drug (or drugs) of choice is so strong that it is difficult to eradicate even after years of staying away from the substances involved. Certain triggers may cause a drug abuser to relapse. Research shows that long-term drug abuse results in significant changes in brain function that persist long after an individual stops using drugs. It is most important to realize that the same is true of not just illegal substances but alcohol and tobacco as well.

The Head Start program was designed to increase the school readiness of low-income children. The Head Start program was designed to increase the school readiness of low-income children.
Climate Change Climate Change
Coral growth rings as an indicator of environmental change Coral growth rings as an indicator of environmental change
Relationship between Income Inequality and Sociopolitical Instability Relationship between Income Inequality and Sociopolitical Instability
A current-carrying wire is placed in a uniform magnetic field, as shown below. A current-carrying wire is placed in a uniform magnetic field, as shown below.
A rigid circular loop has a radius of 0.20 m and is in the xy-plane. A clockwise current I is ... A rigid circular loop has a radius of 0.20 m and is in the xy-plane. A clockwise current I is ...
Video: Hormonal regulation of pregnancy - week 1

For a complete list of videos, visit our video library