Forecast errors from the simple Keynesian consumption function, while less than $65 billion or 3 percent) in either direction,
A) are really quite large for forecasting and policy purposes.
B) are really quite small for forecasting and policy purposes.
C) can result from swings in confidence or changes in tax policy.
D) both a and b.
E) both a and c.

Question

Quizplus · Accepted Answer

Forecast errors of less than $65 billion or 3 percent, while seemingly small, are considered quite large for forecasting and policy purposes in the context of the simple Keynesian consumption function. These errors can indeed result from factors such as swings in confidence or changes in tax policy, making option E (both a and c) the correct choice.

Forecast Errors from the Simple Keynesian Consumption Function, While Less