Exam 7: Keynesian System III: Policy Effects in the Is-Lm Model

Compare the effects of an autonomous increase in government spending in the IS-LM curve version of the Keynesian model with the effect of the same shift within the classical model.

In the liquidity trap case where the LM schedule is nearly horizontal,

In the simple Keynesian model,government spending

If consumption is given by C = 300 + .6 (Y-T)and I = 300 - 40r,the IS curve is

Changes in all of the following shift the LM curve except

If the level of government spending rises and simultaneously there is a fall in the money stock,we definitely know that

The difference between the simple Keynesian model and the IS-LM curve model is that the latter

If government spending rises but the central bank changes the money supply to prevent income from changing,then

If changes in expectations drive business cycles,what relationship would we expect to see between interest rates and output in an economy? Explain using an IS-LM graph to illustrate.

Figure 7-1 -According to Figure 7-1,a decrease in the money stock

Figure 7-4 -As shown in Figure 7-4,an autonomous decline in expectations of future profitability causes the

Figure 7-1 -By referring to Figure 7-1,an increase in the money stock

Within the IS-LM curve model,if the government cut taxes at the same time that there was an autonomous increase in investment demand,then