A) increases consumption expenditure by an amount greater than the tax cut. B) increases consumption expenditure by an amount equal to the tax cut. C) increases consumption expenditure by an amount that is less than the value of the tax cut. D) has no effect on consumption expenditure. E) reduces consumption expenditure by an amount that is less than the value of the tax cut. A) increases consumption expenditure by an amount greater than the tax cut. B) increases consumption expenditure by an amount equal to the tax cut. C) increases consumption expenditure by an amount that is less than the value of the tax cut. D) has no effect on consumption expenditure. E) reduces consumption expenditure by an amount that is less than the value of the tax cut.

Exam 27: The IS Curve

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In the Keynesian cross diagram,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.

(Multiple Choice)

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Question 81

A fall in inventories is synonymous with ________ investment.

(Multiple Choice)

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Question 82

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

(Multiple Choice)

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Question 83

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."

(Multiple Choice)

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Question 84

A decrease in autonomous planned investment spending,other things equal,shifts the curve to the .

(Multiple Choice)

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Question 85

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

(Multiple Choice)

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Question 86

Planned investment spending is higher

(Multiple Choice)

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Question 87

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

(Multiple Choice)

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Question 88

A decline in taxes consumer expenditure and shifts the curve to the ,everything else held constant.

(Multiple Choice)

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Question 89

A shift in tastes toward American goods net exports in the U.S.and causes the IS curve to shift to the in the U.S. ,everything else held constant.

(Multiple Choice)

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Question 90

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 down,the equilibrium level of aggregate output to ,and the IS curve to shift to the ,everything else held constant.

(Multiple Choice)

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Question 91

A tax cut initially

(Multiple Choice)

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Question 92

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

(Multiple Choice)

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Question 93

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.

(Multiple Choice)

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Question 94

The ________ describes points for which the goods market is in equilibrium.

(Multiple Choice)

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Question 95

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

(Multiple Choice)

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Question 96

The negative relation between investment spending and the interest rate is what gives the curve its slope.

(Multiple Choice)

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Question 97

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

(Multiple Choice)

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Question 98

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

(Multiple Choice)

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Question 99

If the consumption function is C = 20 + 0.5YD,then an increase in disposable income by $100 will result in an increase in consumer expenditure by

(Multiple Choice)

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Question 100

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Exam 27: The IS Curve

A fall in inventories is synonymous with ________ investment.

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

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."

A decrease in autonomous planned investment spending,other things equal,shifts the ________ curve to the ________.

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

Planned investment spending is higher

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

A decline in taxes ________ consumer expenditure and shifts the ________ curve to the ________,everything else held constant.

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

A tax cut initially

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

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.

The ________ describes points for which the goods market is in equilibrium.

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

The negative relation between investment spending and the interest rate is what gives the ________ curve its ________ slope.

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

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

If the consumption function is C = 20 + 0.5YD,then an increase in disposable income by $100 will result in an increase in consumer expenditure by

Why Study Money,banking,and Financial Markets

An Overview of the Financial System

What Is Money

The Meaning of Interest Rates

The Behavior of Interest Rates

The Risk and Term Structure of Interest Rates

The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis

An Economic Analysis of Financial Structure

Banking and the Management of Financial Institutions

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

Financial Crises

Nonbank Finance

Financial Derivatives

Conflicts of Interest in the Financial Industry

Central Banks and the Federal Reserve System

The Money Supply Process

Tools of Monetary Policy

The Conduct of Monetary Policy: Strategy and Tactics

The Foreign Exchange Market

The International Financial System

Quantity Theory, inflation and the Demand for Money

Aggregate Demand and Supply Analysis

Monetary Policy Theory

Transmission Mechanisms of Monetary Policy

Financial Crises in Emerging Market Economies

The Monetary Policy and Aggregate Demand Curves

The Role of Expectations in Monetary Policy

The ISLM Model

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A decrease in autonomous planned investment spending,other things equal,shifts the curve to the .

A decline in taxes consumer expenditure and shifts the curve to the ,everything else held constant.

A shift in tastes toward American goods net exports in the U.S.and causes the IS curve to shift to the in the U.S. ,everything else held constant.

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

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.

The negative relation between investment spending and the interest rate is what gives the curve its slope.

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

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