The Keynesian multiplier relationship Y = 1/ (1-c) is derived from two initial equations: Y = C + I and C= cY. For the multiplier relationship to be acceptable, a. the initial two equations must be acceptable b. saving must be negative c. the algebraic derivation must be correct d. all individuals must receive the same income
The Keynesian multiplier relationship Y = 1/ (1-c) is derived from two initial equations: Y = C + I and C= cY. For the multiplier relationship to be acceptable, a. the initial two equations must be acceptable b. saving must be negative c. the algebraic derivation must be correct d. all individuals must receive the same income
Chapter8: The Keynesian Model
Section: Chapter Questions
Problem 17SQ
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Question
The Keynesian multiplier relationship Y = 1/ (1-c) is derived from two initial equations: Y = C + I and C= cY. For the multiplier relationship to be acceptable,
a. the initial two equations must be acceptable
b. saving must be negative
c. the algebraic derivation must be correct
d. all individuals must receive the same income
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