1. Please show that
(a) AD is downward-slopping for a large open economy with Mundell-Fleming model.
(b) AD curve for a large open economy is flatter than the one for a closed economy.
2. This question set is about consumption function.
(a) What is Keynes’ consumption?
(b) What is the problem(s) about Keynes’ consumption function?
(c) Please explain how life-cycle hypothesis solves the problem(s) mentioned above?