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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
y=c+c1(y-t0-t1y,r)+i+g
State the Monetary base and the supply of money - central bank It is not possible for the central bank to print and distribute money - that would increase their debt without i
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