(Answered) 1 an increase in the real interest rate makes current

Economics

1. "An increase in the real interest rate makes current consumption relatively cheaper than future consumption"

a. "The Keynesian consumption function, which implies that agents consume a constant fraction of their income, does not match short run household data"

b."If an agent is liquidity constrained, then an unexpected increase in transitory income of $100 can result in the agentís current consumption increasing by $100"

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Macroeconomics, Economics

Category:- Macroeconomics
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