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Q. Explain the classical motivation?
The classical motivation: Consumers want to smooth their consumption over time. In good times, consumers know that it is a temporary state. Rather than increasing consumption, they save and use their savings in bad times.
Figure: Classical and Keynesian consumption function
What advantages might a socialist system have in responding to the needs of people struck by an emergency situation like the earthquake that occurred in Haiti in January, 2010?
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why and how is price level determined by the monetary sector in the classical model?
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Q. Relation between nominal and real interest rate? Relation between nominal interest rate, real interest rate and inflation If we signify the nominal interest rate by R
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