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In what direction will each of the following independent events shift the consumption function or the investment function? Explain your answers.

  1. A sharp, sustained decrease in stock prices.
  2. An economy-wide expectation that a recession is over and that a period sustained expansion will occur.
  3. The marginal propensity to spend increases from 0.75 to 0.8.
  4. Real interest rates increase.

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M91810921
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