Exam 11: The Is Curve

Suppose , , , , and ) For any given Equals ________ and the economy ________.

In the IS curve, is given by ________, where Is current output and Is potential output.

In the IS curve, represents:

Consider the IS curve . If there is no demand shock and And , a 1 percent increase in the real interest rate causes short-run output to:

If the government gives firms a temporary investment tax credit:

Refer to the following figure when answering the following questions. Figure 11.6: IS Curve -Consider the IS curve in Figure 11.6. If the interest rate increases and there is a positive aggregate demand shock, the economy would move from point e to point:

Suppose , , , , and ) For any given Equals ________ and the economy ________.

Relatively recently, Toyota took over the position of the world's largest automobile manufacturer from General Motors (GM). This is an example of ________ in the United States.

Refer to the following table when answering the following questions. Table 11.1: Real Growth Rates: 1970-2015 -You are given the data in Table 11.1, which covers the period 1970-2015. "Mean" is the average growth over the period and "St Dev" is the standard deviation of the growth (a measure of volatility) of real output, consumption, investment, and government expenditures. From this information, you conclude that:

In 2009, in response to financial crisis, the Obama administration and the U.S. Congress passed the ________; in 2001, the ________ administration passed the ________ to raise incentives for investment.

In the equation , the term Is ________ and Is ________.

In the equation , if Equals zero, investment:

If there is an aggregate demand shock:

________ provided a "natural experiment" for the permanent-income and life-cycle hypotheses, which used to provide an annual ________.

In the short run, if the Federal Reserve reduces interest rates, firms:

An increase in income taxes is a negative aggregate demand shock.

Agency problems occur when both parties have identical information.

The I in the IS curve stands for ________ and S denotes ________.

According to the life-cycle hypothesis, incomes are highest when an individual is in his or her twenties and thirties.

Consider the United States and Mexico. Both countries are identical, except that Mexican firms are less responsive to interest changes than U.S. firms. If the interest rate in each country were to rise by 2 percent, the Mexican economy would move further into recession than the U.S. economy.