Consumption function in the IS-LM model, Macroeconomics

Assignment Help:

Q. Consumption function in the IS-LM model?

The consumption function will be the same as in cross model, consumption will depend positively on Y. In the classical model, consumption relies negatively on the real interest rate. You can allow consumption to depend negatively on interest rates in the IS-LM as well. You should then write C = C(Y, R). In the literature, both variants are found but then since the results will be largely the same so we choose to let C depend on Y only, C = C(Y). We will also, for the same reason, model imports as a function of Y only albeit it may depend on R as well.


Related Discussions:- Consumption function in the IS-LM model

What are the production elasticities of demand, The following Cobb-Douglas ...

The following Cobb-Douglas production function is used to describe the output generated by a local government maintenance agency. Q = αL β1 K β2 E β3 Where L represents numb

Fiscal policy and budget, Fiscal policy is the program of government’s with...

Fiscal policy is the program of government’s with respect to the amount and composition of (i) expenditure: the purchase of commodities and services, and spending in the form of su

Graph the industry demand and supply, Construct two graphs that exhibit equ...

Construct two graphs that exhibit equilibrium in the petrol market - assume that there are no taxes. Clearly label the equilibrium values. (a) Graph the AFC, AVC, ATC, and MC fu

Financial crisis, how adverse selection has an impact on financial crisis

how adverse selection has an impact on financial crisis

Credit multiplier, use a numerical example to illustrate how credit multipl...

use a numerical example to illustrate how credit multiplier works

Village panchyat project on agriculture, What are the topic in village panc...

What are the topic in village panchyat project on agriculture

Inflation, how inflation trade off is not feasible under adaptive expectati...

how inflation trade off is not feasible under adaptive expectation

Probability that the stocks return, Suppose that an individual stock's retu...

Suppose that an individual stock's return is normally distributed with a mean of 11% and a standard deviation of 5%. What is the probability that the stock's return will be less th

Underlined phrase above referring, What is this underlined phrase above ref...

What is this underlined phrase above referring to in the chapter lecture? Select one: a. Physical capital b. Social capital c. Human capital d. Entrepreneurship e. Growth com

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd