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Q. Is Consumption depend on GDP in the cross model?
Aggregate demand
The consumption function
Consumption C(Y) depends positively on GDP in the cross model
Remember that in classical model, consumption relies on the real interest rate. In cross model it relies on GDP. Note that it isn't possible to include r in the cross model as it is fixed. Though, we need to justify the dependence of C on Y.
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The formula for calculating static and dynamic multiplier
how to calculate the ultimate change in deposits and credit?
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