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Q. Describe the Keynes motivation?
Keynes' motivation: In good times, when Y is high (above its trend), national income is high (above it trend). Consumers will take this opportunity to buy things they otherwise can't afford. In bad times, conversely consumers simply can't buy things they would have bought if income was higher.
Suppose that Michael and Dwight each have a $60 weekly entertainment budget. They pay the same prices for two goods, "an evening reading books" (an ERB) and "an evening of beer and
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