Exam 23: The Keynesian Framework

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

In the Keynesian world a rising real money supply causes GDP to __________ by __________ the real interest rate which causes a(n)__________ in investment.

A horizontal aggregate supply curve reflects the assumption that the

If an individual earns $1,500 a month and spends it evenly throughout the month, transaction balances will average

In the Keynesian model, an unwanted decrease in inventories leads to

If the MPC is 0.9, then an increase in taxes of $100 can be expected to __________ consumption by the amount of __________.

According to the Keynesian view of the demand for money, an increase in uncertainty will cause

In terms of the aggregate demand and supply framework, a decrease in the money supply will shift the aggregate

In a simple Keynesian model, a decrease in income leads to a decrease in

According to Keynes, the key difference between money and bonds is that

In the Keynesian world a falling real money supply causes GDP to __________ by __________ the real interest rate which causes a(n)__________ in investment.

Using the simple Keynesian model with a consumption function of C = 200 + .9Y, an $10 change in desired investment leads to a change in equilibrium income of

In the standard consumption function of C = a + bY, a change in corporate stock prices would be reflected by a change in

In the Keynesian model, an increase in government spending increases

If the marginal propensity to consume is 0.7 and if output increases by $200, then consumption spending

An increase in interest rates will cause investment to

In the Keynesian model, when desired saving exceeds desired investment,

The aggregate demand curve is negatively sloped because a lower price level

If consumption behavior can be described as C = 50 + .8Y, then the saving function is

Assume a consumption function of C = 90 + .75Y. The saving function for this economy is equal to