Solved

Assume That Households Decide to Save More,so Autonomous Consumption Is

Question 89

Essay

Assume that households decide to save more,so autonomous consumption is reduced.Explain,step-by-step,how the components of expenditure adjust to bring the economy to its new equilibrium.Using the IS curve equation and the consumption function,compare the initial and new equilibria with respect to saving and the real interest rate.

Correct Answer:

verifed

Verified

Consumption is reduced,so there is unpla...

View Answer

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Q84: Assume that the economy is in equilibrium

Q85: For simplicity,the IS model assumes that neither

Q86: -Referring to the</p></div><svg width=

Q87: The IS model implies that a dollar

Q88: In a stock market boom _.
A)autonomous consumption

Q90: A decrease in autonomous investment _.
A)decreases equilibrium

Q91: IS Graph 2 IS Graph</p></div><svg width=

Q92: In a stock market boom _.
A)government spending

Q93: IS Graph 2 IS Graph</p></div><svg width=

Q94: An increase in autonomous investment _.
A)increases equilibrium

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents