Exam 20: The Is Curve

Under Keynesian analysis,aggregate demand can be written as

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

Keynes believed that changes in autonomous spending were dominated by unstable fluctuations in ________,which are influenced by emotional waves of optimism and pessimism-factors he referred to as "animal spirits."

Assume that disposable income equals $1000 and the mpc equals 0.6.If total consumption equal $800,then autonomous consumption is equal to

If aggregated demand is less than actual output,unplanned inventory ________ will cause output to ________.

Keynes reasoned that consumer expenditure is most closely related to

Everything else held constant,a shift in tastes in the U.S.toward Mexican goods will ________ net exports in the U.S.and cause the quantity of aggregate output demanded to ________ in Mexico.

An autonomous appreciation of the U.S.dollar makes American goods ________ expensive relative to foreign goods which ________ net exports in the U.S.

Using the information contained in Situation 20-1,if autonomous consumption increases by $100,then equilibrium aggregate output will change by

The marginal propensity to consume (mpc)can be defined as the fraction of

The ________ traces out the points for which total quantity of goods produced equals total quantity of goods demanded.

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

Using the information in situation 20-2,if government spending increases by $100,then the equilibrium aggregate output will change by

In the Keynesian cross diagram,a decline in autonomous consumer expenditure causes the aggregate demand function to shift down,the equilibrium level of aggregate output to ________,and the IS curve to shift to the ________,everything else held constant.

Assume that autonomous consumption equals $200 and that the mpc equals 0.8.If disposable income equals $1000,then total consumption equals

Keynes was especially concerned with explaining the

When the interest rate rises,

In a closed economy,aggregate demand is the sum of

Everything else held constant,changes in the interest rate affect planned investment spending and hence the equilibrium level of output,but this change in investment spending

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