MACRO QUESTIONS WEEK 3 Provide a brief answer to the following questions:


Provide a brief answer to the following questions:


1)  What is Consumption and what types can it take?

2)  From Macroeconomics perspective, what is an Investment?

3)  What is a Consumption Function?

4)  What is Absolute Income Hypothesis of consumption?

5)  What is Permanent Income Hypothesis of consumption?

6)  What is Life Cycle Income Hypothesis of consumption?

7)  What is Multiplier Effect and what is its significance?

8)  What are Government Expenditure Multiplier, Investment Multiplier, and Tax Multiplier?  State their appropriate formulas.

9)  Define Aggregate Demand and Aggregate Supply.

10)  What is a financial system?  Give some examples.

11)  Who are Classical economists and what are the basic tenets of their thought?

12)  What are the tasks of a financial system?

13)  Who are Keynesian economists and what are their basic objections to the Classical economist?

14)  What is “autonomous consumption”?

15)  According to Keynes, what is the most important determinant of consumption?

16)  Define “Marginal Propensity to Consume.”

17)  What is the most important policy implication of Classical School of economic thought?

18)  What is Government Expenditure?

19)  What is a tax?

20)  What is Fiscal policy?

21)  What is a Recessionary Gap?

22)  What is an Inflationary Gap?

23)  What suggestion Classical economists will give to combat Recessionary or Inflationary gap?

24)  How fiscal policy can close a recessionary gap or an inflationary  gap?

25)  Define expansionary and contractionary fiscal policy. 

26)  What is a transfer payment?