Exam 3: Income and Interest Rates: the Keynesian Cross Model and the Is Curve

From 1950 till 2009 the four-quarter growth rate of real GDP has been as high as ________ percent and as low as ________ percent.

If disposable income increases by $100 and consumption increased by $85,ceteris paribus,we may conclude that

Figure 3-2 -Refer to the information above.What is the level of consumption when the level of income is 850?

A lower interest rate ________ Ap and thus causes ________ the IS curve.

At every point on the IS curve,the level of income on the horizontal axis equals

In the consumption function,suppose a = 60,c = 0.75,Y = 3000,and T = 800.Consumption expenditure is

Suppose that along the economy-wide rate-of-return line,the current interest rate of 8 percent causes a planned investment of $300 billion.Should the interest rate fall to 7 percent,the $300 billionth dollar of investment spending now generates a ________ rate of profit,which puts ________ pressure on investment.

Suppose that along the economy-wide rate-of-return line,the current interest rate of 8 percent causes planned investment of $300 billion.The $250-billionth dollar of investment spending has a rate of return ________ 8 percent and thus a ________ profit rate.

Figure 3-2 -Refer to the information above.What will be the equilibrium level of GDP if taxes are reduced by 10?

Which element of total planned expenditure is NOT included in "autonomous planned spending"?

The multiplier is defined as the ratio of a change in income to the

The owner of Speedee Copy Center calculates that purchasing a new $13,000 color copier would return $1800 a year after payment of all expenses besides interest payments on borrowing $13,000.What is the maximum interest rate that makes purchasing the copier profitable?

If the MPS is 0.1 and the income tax rate is 0.33,and the fraction of income spent on imports is 0.25,then the multiplier is

In the consumption function C = a + c(Y -T),induced consumption is

Income on the horizontal axis at which the vertical distance to the 45-degree line is greater than the vertical distance to the Ep line gives rise to a ________ amount of unplanned inventory investment,and thus ________ pressure on output.

Assume that all taxes are lump-sum,net exports = 0,and the marginal propensity to consume is 0.8.Then,if investment and taxes were each to fall by $100 million,the equilibrium level of income would

On a diagram of the planned expenditure function Ep and the 45-degree line,we find autonomous planned spending

As used in this text,"autonomous" variables are

The inauguration of a new President often increases the degree of optimism in foreign business firms and foreign households,causing net exports to

In the simplest Keynesian model of the determination of income,interest rates are assumed to be