The simple Keynesian model is a prominent macroeconomics model.
1. List the basic assumptions of the simple Keynesian model.
2. State why Keynes was so concerned about consumption and define these terms:
a. Autonomous consumption
b. MPC
c. The consumption function
3. List the three ways in which consumption can change.
4. Describe the link between consumption and saving in the simple Keynesian model.
5. Describe the multiplier process.
6. State the formula for calculating the size of a multiplier effect.
7. Describe the shortcomings of the multiplier.