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.

Posted Date: 8/14/2013 2:41:11 AM | Location : United States

Ask an Expert

Related Discussions:- Is consumption depend on GDP in the cross model, Assignment Help, Ask Question on Is consumption depend on GDP in the cross model, Get Answer, Expert's Help, Is consumption depend on GDP in the cross model Discussions

Write discussion on Is consumption depend on GDP in the cross model
Your posts are moderated

Write your message here..

Related Questions

Perfectly competitive firm, Consider the following demand schedule. Does it... Consider the following demand schedule. Does it apply to a perfectly competitive firm? Compute marginal and average revenue Price Quantity Price Quantity $95 2 $55 5 $88 3 $40 6 $

Exchange rates, can a country have a current account deficit and a capital ... can a country have a current account deficit and a capital account deficit at the same time?

Financial payments flow between firms and government, Explain whether, the... Explain whether, the following statements are TRUE, FALSE or UNCERTAIN. Briefly justify your answer. (i) The circular flow shows how real resources and financial payments flow

Describe effects of hours spent studying, Design a hypothetical ideal rando... Design a hypothetical ideal randomized controlled experiment to study the effects of hours spent studying on performance on microeconomics exams. Suggest some impediments to implem

Explain the problem involved in consumer price index, Q. Explain the proble... Q. Explain the problem involved in consumer price Index? To explain the problems involved in calculating CPI we consider MP3 players. If you measure the average price of MP3 pl

Wal-marts supply chain management, Explain the impact of Wal-Mart's supply ... Explain the impact of Wal-Mart's supply chain management on its total product, marginal product, and average product curves. What has been the effect on its retail prices?

Trade liberalisation under wto, TRADE LIBERALISATION UNDER WTO: In  th... TRADE LIBERALISATION UNDER WTO: In  the Uruguay Round negotiations, India agreed to reduce tariff on a  large number of  commodities and  remove quantitative restrictions (QRs

Factors responsible for changes in aggregate supply, Factors Responsible fo... Factors Responsible for changes in Aggregate Supply We know that changes in input costs such as wages, oil and other input prices will cause changes in aggregate supply. Most

Deceased relative at zero prices, Kennesaw University Professor Frank A. Ad... Kennesaw University Professor Frank A. Adams III and Auburn University Professors A. H. Barnett and David L. Kaser man recently estimated the effect of legalizing the sale of cadav

What would be due process require in circumstances, The Russ College of Eng... The Russ College of Engineering and Technology of Ohio University announced in a press conference that it had found "rampant and flagrant plagiarism" in the theses of mechanical en