Exam 22: The Is Curve

Under Keynesian analysis,aggregate demand can be written as ________.

If unplanned investment is positive,firms will ________ production and output will ________.

Describe how the economy heads towards equilibrium and why it has a tendency to settle there.

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.

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

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

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

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

Assume that autonomous consumption equals $200 and disposable income equals $1000.If total consumption equal $800,then the mpc equals ________.

A shift in tastes toward Canadian goods ________ net exports in Canada and causes the IS curve to shift to the ________ in Canada,everything else held constant.

Equilibrium output is reduced by an increase in ________.

In a closed economy,aggregate demand is the sum of ________.

If net exports decrease by 250 and the mpc is 0.75,equilibrium aggregate output ________.

If the interest rate falls,other things being equal,investment spending will ________.

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

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

Assume equilibrium at full employment for an economy characterized by the simple Keynesian model.If the government raises taxes to eliminate a budget deficit,then ________.

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

Using the information in Situation 20-1,if aggregate output is equal to $10,000,then unplanned inventory investment equals ________.

A depreciation of the Canadian dollar makes Canadian goods cheaper relative to foreign goods,resulting in a ________ in net exports in Canada and a ________ shift of the IS curve in Canada,everything else held constant.