Question 1

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.

Accepted Answer

A) decreases;right 
B) decreases;left 
C) increases;right 
D) increases;left 
A) decreases;right 
B) decreases;left 
C) increases;right 
D) increases;left

Question 2

When interest rates rise in the United States (with the price level fixed),the value of the dollar ________,domestic goods become ________ expensive,and net exports ________.

Accepted Answer

A) falls;less;fall 
B) falls;more;rise 
C) rises;more;fall 
D) rises;less;fall 
A) falls;less;fall 
B) falls;more;rise 
C) rises;more;fall 
D) rises;less;fall

Question 3

An increase in unplanned inventory investment for the entire economy equals the excess of

Accepted Answer

A) output over aggregate supply. 
B) output over aggregate demand. 
C) aggregate supply over output. 
D) aggregate demand over output. 
A) output over aggregate supply. 
B) output over aggregate demand. 
C) aggregate supply over output. 
D) aggregate demand over output.

Question 4

Equilibrium output is reduced by an increase in

Accepted Answer

A) planned investment. 
B) taxes. 
C) government spending. 
D) net exports. 
A) planned investment. 
B) taxes. 
C) government spending. 
D) net exports.

Question 5

The IS curve shifts to the left when

Accepted Answer

A) taxes increase. 
B) government spending increases. 
C) the money supply increases. 
D) autonomous planned investment spending increases. 
A) taxes increase. 
B) government spending increases. 
C) the money supply increases. 
D) autonomous planned investment spending increases.

Question 6

A fall in inventories is synonymous with ________ investment.

Accepted Answer

A) negative fixed 
B) positive fixed 
C) positive inventory 
D) negative inventory 
A) negative fixed 
B) positive fixed 
C) positive inventory 
D) negative inventory

Question 7

Use the following Situation to answer the question : situation 20-1
Assume a closed economy with no government. Suppose that autonomous consumption equals $400, planned investment equals $500, and the mpc equals 0.9.

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

Accepted Answer

A) -$1,000. 
B) -$100. 
C) $0. 
D) $100. 
A) -$1,000. 
B) -$100. 
C) $0. 
D) $100.

Question 8

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

Accepted Answer

A) decreases;right 
B) decreases;left 
C) increases;right 
D) increases;left 
A) decreases;right 
B) decreases;left 
C) increases;right 
D) increases;left

Question 9

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

Accepted Answer

A) increases by 1,000. 
B) increases by 750. 
C) decreases by 750. 
D) decreases by 1,000. 
A) increases by 1,000. 
B) increases by 750. 
C) decreases by 750. 
D) decreases by 1,000.

Question 10

Keynes was especially concerned with explaining the ________ level of output and employment during the ________.

Accepted Answer

A) low;1920s 
B) low;1930s 
C) high;1920s 
D) high;1930s 
A) low;1920s 
B) low;1930s 
C) high;1920s 
D) high;1930s

Question 11

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

Accepted Answer

A) below;lower 
B) above;lower 
C) below;raise 
D) above;raise 
A) below;lower 
B) above;lower 
C) below;raise 
D) above;raise

Question 12

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

Accepted Answer

A) fall. 
B) rise. 
C) either rise,fall,or remain unchanged. 
D) not be affected. 
A) fall. 
B) rise. 
C) either rise,fall,or remain unchanged. 
D) not be affected.

Question 13

Keynes mentioned two factors that influenced planned investment spending

Accepted Answer

A) interest rates and disposable income. 
B) interest rates and business expectations about the future. 
C) disposable income and business expectations about the future. 
D) interest rates and business expectations about inflation. 
A) interest rates and disposable income. 
B) interest rates and business expectations about the future. 
C) disposable income and business expectations about the future. 
D) interest rates and business expectations about inflation.

Question 14

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

Accepted Answer

A) right;fall 
B) right;rise 
C) left;fall 
D) left;rise 
A) right;fall 
B) right;rise 
C) left;fall 
D) left;rise

Question 15

Use the following Situation to answer the question : situation 20-1
Assume a closed economy with no government. Suppose that autonomous consumption equals $400, planned investment equals $500, and the mpc equals 0.9.
-Using the information in Situation 20-1,the equilibrium level of aggregate output is

Accepted Answer

A) $900. 
B) $8,000. 
C) $9,000. 
D) $10,000. 
A) $900. 
B) $8,000. 
C) $9,000. 
D) $10,000.

Question 16

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

Accepted Answer

A) below;negative 
B) above;negative 
C) below;positive 
D) above;positive 
A) below;negative 
B) above;negative 
C) below;positive 
D) above;positive

Question 17

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

Accepted Answer

A) below;negative 
B) above;negative 
C) below;positive 
D) above;positive 
A) below;negative 
B) above;negative 
C) below;positive 
D) above;positive

Question 18

If aggregate demand equals output,

Accepted Answer

A) the economy is in a recession. 
B) output will increase. 
C) output will fall. 
D) the economy is at its equilibrium level. 
A) the economy is in a recession. 
B) output will increase. 
C) output will fall. 
D) the economy is at its equilibrium level.

Question 19

Keynes reasoned that consumer expenditure is most closely related to

Accepted Answer

A) the level of interest rates. 
B) the price level. 
C) disposable income. 
D) the marginal tax rate. 
A) the level of interest rates. 
B) the price level. 
C) disposable income. 
D) the marginal tax rate.

Question 20

If young business professionals in America suddenly decide that driving German-made cars is an important status symbol,net exports will tend to ________ causing aggregate demand to ________,everything else held constant.

Accepted Answer

A) fall;fall 
B) fall;rise 
C) rise;fall 
D) rise;rise 
A) fall;fall 
B) fall;rise 
C) rise;fall 
D) rise;rise

Exam 20: The Is Curve

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.

When interest rates rise in the United States (with the price level fixed),the value of the dollar ________,domestic goods become ________ expensive,and net exports ________.

An increase in unplanned inventory investment for the entire economy equals the excess of

Equilibrium output is reduced by an increase in

The IS curve shifts to the left when

A fall in inventories is synonymous with ________ investment.

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

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

Keynes was especially concerned with explaining the ________ level of output and employment during the ________.

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 interest rate falls,other things being equal,investment spending will

Keynes mentioned two factors that influenced planned investment spending

Everything else held constant,if aggregate output is to the ________ of the IS curve,then there is an excess supply 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 ________ and firms will continue to raise production.

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

If aggregate demand equals output,

Keynes reasoned that consumer expenditure is most closely related to

If young business professionals in America suddenly decide that driving German-made cars is an important status symbol,net exports will tend to ________ causing aggregate demand to ________,everything else held constant.

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

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

The Monetary Policy and Aggregate Demand Curves

Aggregate Demand and Supply Analysis

Monetary Policy Theory

The Role of Expectations in Monetary Policy

Transmission Mechanisms of Monetary Policy

Financial Crises in Emerging Market Economies

The ISLM Model

Filters

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.

When interest rates rise in the United States (with the price level fixed),the value of the dollar ,domestic goods become expensive,and net exports .

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

Keynes was especially concerned with explaining the level of output and employment during the .

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

Everything else held constant,if aggregate output is to the of the IS curve,then there is an excess supply 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 and firms will continue to raise production.

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

If young business professionals in America suddenly decide that driving German-made cars is an important status symbol,net exports will tend to causing aggregate demand to ,everything else held constant.