Exam 23: The Keynesian Framework

In the Keynesian model, a decline in interest rates will cause investment to

Unlike the Classical economists, Keynes believed that money could affect real economic activity through its effects on

In the Keynesian model, interest rates are determined by

If the interest rate rose above the equilibrium rate, people would attempt to __________ bonds. Bond prices would __________ and the interest rate would __________.

In the "cost of capital channel" of monetary policy, a lower interest rate __________ spending.

In the Keynesian model consumption is primarily determined by __________ and investment is primarily determined by __________.

Which of the following will cause the aggregate demand curve to shift to the right?

If total consumption spending is $1,000, the marginal propensity to consume is 0.6, and total output is $2,000, then the constant term is

Which of the following will cause the aggregate demand curve to shift to the left?

Which of the following is an example of an autonomous spending change?

As part of the "exchange rate channel of monetary policy," a higher money supply causes a __________ interest rate and thus __________ of the domestic currency.

If an person believes that it is likely that interest rates will increase, she is likely to hold less

Which of the following could lead to an upward shift in the consumption function?

As part of the "exchange rate effect of monetary policy," a higher money supply causes __________ of the domestic currency and thus __________ net exports.

In the Keynesian model, money demand is positively related to

As part of the "exchange rate effect of monetary policy," a lower money supply causes a __________ interest rate and thus __________ of the domestic currency.

The marginal propensity to consume is assumed to be

In the Keynesian model, liquidity preference refers to the

In the simple Keynesian framework, the price level

In an economy with no taxes, an income level of $400 billion, consumption of $300 billion, and government spending of $25 billion, saving is equal to