Exam 20: The Is Curve

In the Keynesian model of income determination,consumer expenditure includes spending by

Economists define investment as the purchase of

Aggregate output is ________ related to autonomous consumer expenditure,and is ________ related to the level of taxes.

Everything else held constant,if aggregate output is to the ________ of the IS curve,then there is an excess ________ of goods which will cause aggregate output to fall.

The Keynesian framework indicates that government can play an important role in determining aggregate output by

Which of the following does not shift the IS curve?

The ________ describes points for which the goods market is in equilibrium.

An appreciation of the U.S.dollar makes foreign goods cheaper relative to American goods,resulting in a ________ in net exports in the U.S.and a ________ shift of the IS curve in the U.S.,everything else held constant.

A tax cut ________ disposable income,________ consumption expenditure,and shifts the IS curve to the ________,everything else held constant.

Everything else held constant,if aggregate output is to the left of the IS curve,then there is an excess ________ of goods which will cause aggregate output to ________.

In the Keynesian framework,as long as output is ________ the equilibrium level,unplanned inventory investment will remain ________ and firms will continue to raise production.

Planned investment spending is higher

When the interest rate is ________,________ investments in physical capital will earn more than the cost of borrowed funds,so planned investment spending is ________.

If net exports increase by 100 and the mpc is 0.75,equilibrium aggregate output increases by

If young business professionals in America suddenly decide that driving German-made cars is an important status symbol,net exports will tend to ________ causing aggregate demand to ________,everything else held constant.

In the Keynesian framework,as long as output is ________ the equilibrium level,unplanned inventory investment will remain positive and firms will continue to ________ production.

Keynes believed that unstable investment caused the Great Depression.Using the simple Keynesian model,explain how a fall in investment affects equilibrium output.

If aggregate demand falls short of current output,business firms will ________ production to ________ inventories.

Everything else held constant,if consumption expenditure increases by 65 for a 100 increase in disposable income,the mpc is

In the Keynesian cross diagram,an increase in investment spending because companies become more optimistic about investment profitability causes the aggregate demand function to shift up,the equilibrium level of aggregate output to ________,and the IS curve to shift to the ________,everything else held constant.