In the simple Keynesian model, if the tax function is given by T = 0.15Y and the consumption function is C = 50 + 0.7YD then a 10-unit increase in government spending would increase equilibrium income by

If there is currently a recessionary gap in the economy the Fed could work toward recovery by increasing the money supply and decreasing the interest rate

a. True b. False Indicate whether the statement is true or false

Compare the determinants of consumption with investment. Most economists regard investment as being less stable than consumption. Looking at the determinants of each factor, support this contention.

What will be an ideal response?