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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
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What is the relationship between deposit multipier,Credit Multiplier and Deposit multiplier?
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Explain the trade-off between equity and efficiency. Identify how individuals and organizations are likely to change their behavior as a result of government actions.
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