Exam 20: The Is Curve

In the simple Keynesian framework,declines in planned investment spending that produce high unemployment can be offset by raising

Keynes was especially interested in explaining movements of ________ because he wanted to explain why the Great Depression had occurred and how government policy could be used to increase ________ in a similar economic situation.

Keynes believed that changes in autonomous spending were dominated by changes in

Using the information contained in Situation 20-1,if planned investment decreases by $100,the equilibrium aggregate output will change by

In an open economy,aggregate demand is the sum of

Keynes was especially concerned with explaining the ________ level of output and employment during the ________.

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

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

Other things equal,a decrease in autonomous consumption shifts the ________ curve to the ________.

An increase in unplanned inventory investment for the entire economy equals the excess of

A decline in autonomous planned investment spending causes the equilibrium level of aggregate output to ________ and shifts the ________ curve to the ________,everything else held constant.

Using the information in situation 20-2,if government increases their spending by $50 and increases net taxes by 50,then equilibrium aggregate output will change by

A shift in tastes toward American goods ________ net exports in the U.S.and causes the quantity of aggregate output demanded to ________ in the U.S.,everything else held constant.

If actual output is less than equilibrium output,firms will ________ output to keep from ________ inventories.

If net exports increase by 250 and the mpc is 0.75,equilibrium aggregate output increases by

An increase in interest rates

If aggregate demand is less than the level of aggregate output,then ________ inventory investment will be ________.

A difference between inventory investment and fixed investment is that

There are two types of investment: ________ investment-the spending by business firms on equipment and structures,and planned spending on residential houses-and ________ investment-spending by business firms on additional holdings of raw materials,parts,and finished goods.

When the level of unplanned inventory investment is equal to zero,the economy is