Exam 21: The Is Curve

Planned investment spending is higher ________.

If the consumption function is C = 20 + 0.5YD, then an increase in disposable income by $100 will result in an increase in consumer expenditure by ________.

How is Keynes's consumption function defined? describe the terms used in this function?

If young business professionals in Canada 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.

If net exports increase by 250 and the mpc is 0.75, equilibrium aggregate output increases by ________.

An increase in autonomous consumer expenditure causes the equilibrium level of aggregate output to ________ at any given interest rate and shifts the ________ curve to the ________, everything else held constant.

In the simple Keynesian model, equilibrium aggregate output is determined by ________.

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

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 contained in Situation 20-1, if planned investment decreases by $100, the equilibrium aggregate output will change by ________.

Keynes believed that changes in autonomous spending were dominated by changes in ________.

His analysis started with the recognition that the total quantity demanded of an economy's output was the sum of four types of spending: consumer expenditure, planned investment spending, government spending, and net exports.

The Bank of Canada increases interest rates when they want to reduce aggregate demand to fight inflation. How do increases in the interest rate reduce aggregate demand?

Planned investment spending, a component of aggregate demand, is equal to ________.

A decrease in interest rates ________.

A decline in taxes ________ consumer expenditure and shifts the ________ curve to the ________, everything else held constant.

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

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 contained in Situation 20-1, if autonomous consumption increases by $100, then equilibrium aggregate output will change by ________.

A decline in autonomous consumer expenditure causes the aggregate demand function to shift down, the equilibrium level of aggregate output to ________, and the IS curve to shift to the ________, everything else held constant.

A difference between inventory investment and fixed investment is that ________.

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.