Exam 20: The Is Curve

If net exports increase by 100 and the mpc is 0.75,equilibrium aggregate output increases by

If actual output is less than equilibrium output,firms will ________ output to keep from ________ inventories.

In the Keynesian cross diagram,an increase in autonomous consumer expenditure causes the aggregate demand function to shift ________ and the equilibrium level of aggregate output to ________,everything else held constant.

A fall in inventories is synonymous with ________ investment.

If aggregate demand equals output,

If unplanned investment is negative,firms will ________ production and output will ________.

Planned investment spending is higher

Keynes reasoned that consumer expenditure is most closely related to

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

Keynes was especially interested in explaining movements of ________ because he wanted to explain why the Great Depression had occurred and how government policy could be used to increase ________ in a similar economic situation.

A tax increase ________ disposable income,________ consumption expenditure,and shifts the IS curve to the ________,everything else held constant.

Using the information in Situation 20-1,the equilibrium level of aggregate output is

Other things equal,a decrease in autonomous consumption shifts the ________ curve to the ________.

Everything else held constant,if consumption expenditure increases by 65 for a 100 increase in disposable income,the mpc is

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

A depreciation of the U.S.dollar makes American goods cheaper relative to foreign goods,resulting in a ________ in net exports in the U.S.and a ________ shift of the IS curve in the U.S.,everything else held constant.

Using the information in situation 20-2,if government spending increases by $100,then the equilibrium aggregate output will change by

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 ________.

When the interest rate rises,

A difference between inventory investment and fixed investment is that