Exam 21: The Is Curve

If the consumption function is C = 20 + 0.8YD, then an increase in disposable income by $100 will result in an increase in consumer expenditure by ________.

A decrease in investment spending because companies become more pessimistic about investment profitability causes the aggregate demand function to shift ________, the equilibrium level of aggregate output to fall, and the IS curve to shift to the ________, everything else held constant.

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

A decrease in unplanned inventory investment for the entire economy equals the excess of ________.

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 $10000, then unplanned inventory investment equals ________.

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 ________.

Define the IS curve.

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

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 tax cut ________ disposable income, ________ consumption expenditure, and shifts the IS curve to the ________, 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 in Situation 20-1, if aggregate output equals $8000, the unplanned inventory investment equals ________.

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

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

A decrease 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.

Economists define investment as the purchase of ________.

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 ________.

If the consumption function is expressed as C = a + mpc × YD, then "mpc" represents ________.

In the simple Keynesian framework, declines in planned investment spending that produce high unemployment can be offset by raising ________.

If aggregate demand falls short of current output, business firms will ________ production to ________ inventories.

Everything else held constant, a shift in tastes in Canada toward Mexican goods will ________ net exports in Canada and cause the quantity of aggregate output demanded to ________ in Mexico.