According to the IS-LM model, what happens to the interest rate,income,consumption and investment

Q: Explain why investment (I) varies more from year-to-year than consumption (C).

A: Lets understand the factors on which the investment depends: 1. Marginal efficiency of capital: It…

Q: Define the term Net Investment?

A: Investment: In economics, the term investment refers to the purchase of commodities that will be…

Q: What is the Euler equation for consumption, and what is its economicinterpretation?

A: Consumption: The use of goods and services is called consumption. The consumption of goods and…

Q: How would an increase in the interest rate affect consumption and investment function?

A: Consumption signifies the amount of currencies spent on buying current goods and services by the…

Q: rate is R=20%. Using the two-period consumption-savings model, how will this year's consumption…

A: The consumption function shows the total income and consumption goods and services relationship in…

Q: Explain how each of the following will affect the consumption and saving schedules (as they relate…

A: Gross domestic product (GDP) is the standard measure of the value added created through the…

Q: Disposable Income 35,000 MPC Consumption Savings .9 35,000 .7 55,000 .8 55,000 1

A: The marginal propensity to consume (MPC) measures the change in consumption when the disposable…

Q: What is an investment schedule and how does it differ from an investment demand curve?

A: The capital stock is an accumulation of capital assets( like plant and machinery, etc)  that helps…

Q: Explain how the current level of investment depends on the following factors: 1) the current level…

A: The expenditure which is incurred in the hope of earning higher returns in the future is known as…

Q: Using the IS–LM diagram, show the effects on output and the interest rate of a increase in…

A: The change in the government spending affects the IS-LM model thereby affecting the output and…

Q: Why does investment vary more than consumption from year to year?

A: Consumption and investment (savings) are the two variables or elements of an individual’s income. An…

Q: Explain the relationship between consumption and saving in the Keynesian model.

A: The total expenditure within the economy and its consequences on output, employment, and inflation…

Q: According to the IS-LM model, what happens to the interest rate,income,consumption and investment…

A: IS-LM model  IS and LM model is used to show the relationship between the interest rate and output…

Q: Explain the criticism of life cycle theory of consumption and highlight the importance of economic…

A: Explaination of the criticism of life cycle theory of consumption The life cycle hypothesis accepts…

Q: Please help with the following economic question : Explain the relationship between Investment…

A: Changes in the current interest rate have an impact on the amount of investment in the economy.…

Q: How does the life cycle and the permanent income hypothesis resolve the seemingly contradictory…

A:

Q: How do you explain why investment falls as interest rate rises

A: The investment and interest rate are the two different concepts that are inter-related with each…

Q: what is the relationship between investment and saving in the cyclical flow of the economy

A: The model of the cyclical flow of the economy or the circular flow model shows the flow of money…

Q: Using the circular flow model, explain what might happen to the level of income of an economy if it…

A: If it is experiences an increase in exports then it causes an increase to the level of income…