How consistent is the Keynesian consumption function with the random walk hypothesis?
What will be an ideal response?
For changes in aggregate income that are unexpected, the Keynesian consumption function captures the impact on current consumption. If economic behavior is guided by rational expectations, and there are no surprises, then aggregate income reflects all available information so, again, the Keynesian consumption function is a good model.
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________________ fiscal policy decreases the level of aggregate demand, either through cuts in government spending or increases in taxes.
a. Expansionary b. Contractionary c. Lenient d. Strict
A depreciation of the U.S. dollar will benefit the _____. a. countries exporting to the U.S
b. Australian firms selling in the U.S. c. U.S firms selling in Europe d. Japanese investors who have invested money in the U.S.
Which of the following is a popular type of investment?
A. Dividends B. Portfolios C. Mutual funds D. Capital gains
Compared to private bargaining, using eminent domain to acquire land generally
A) keeps negotiation costs low. B) is more time consuming and less successful. C) reduces cooperative surplus. D) is frowned upon by the government.