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Q. Is Consumption depend on GDP in the cross model?
Aggregate demand
The consumption function
Consumption C(Y) depends positively on GDP in the cross model
Remember that in classical model, consumption relies on the real interest rate. In cross model it relies on GDP. Note that it isn't possible to include r in the cross model as it is fixed. Though, we need to justify the dependence of C on Y.
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the uses of production function
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However, these results should be approached with due caution. The limitations and problems associated with VAR modelling have been outlined in this paper, therefore these observati
The tax-adjusted Multiplier and the balanced budget Multiplier are explained below: Taxes act as drag on the multiplier effect of government expenditure, because they represent
Q. What is Demand for money? Demand for money The demand for money depends negatively on R and positively on the Yin the IS-LM model As fo
Buying government securities: When a commercial bank buys government bonds, the effect is substantially the same as that of lending - new money is created. To
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