Describe the three basic points that Keynes made regarding consumption. Briefly explain why consumption was such a main concern in the Keynesian model
The three basic points that Keynes made about consumption are: (1 ) Consumption depends on disposable income, (2 ) Consumption and disposable income are directly related, and (3 ) any change in income will be greater than any resulting change in consumption. Consumption was a major concern for Keynes because it makes up the largest portion of total spending.
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Under monetary neutrality, an increase in the money supply causes output to ________ and the price level to ________
A) rise; rise B) rise; not change C) not change; not change D) not change; rise
When market participants have rational expectations,
A) they use all information available to them. B) they only slowly adjust their expectations to news which could affect prices or returns. C) they are less likely to make accurate forecasts than if they have adaptive expectations. D) they are able to forecast interest rates more accurately than inflation rates.
The value of cross-price elasticity of demand between orange soda and grape soda is
a. negative b. positive c. 0 d. between -1 and 0 e. less than -1
The selling power of money is the rate at which it exchanges for goods and services
Indicate whether the statement is true or false