Exam 21: The Is Curve

A shift in tastes toward foreign goods ________ net exports in Canada and causes the quantity of aggregate output demanded to ________ in Canada, everything else held constant.

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

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

Assume equilibrium at full employment for an economy characterized by the simple Keynesian model. If the government raises taxes to eliminate a budget deficit, then ________.

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

If aggregated demand is less than actual output, unplanned inventory ________ will cause output to ________.

The negative relation between investment spending and the interest rate is what gives the ________ curve its ________ slope.

An increase in investment spending because companies become more optimistic about investment profitability causes the aggregate demand function to shift ________, the equilibrium level of aggregate output to rise, and the IS curve to shift to the ________, everything else held constant.

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

Keynes believed that unstable investment caused the Great Depression. Using the simple Keynesian model, explain how a fall in investment affects equilibrium output.

When the interest rate rises, ________.

In the Keynesian model of income determination, consumer expenditure includes spending by ________.

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

The Keynesian framework indicates that government can play an important role in determining aggregate output by ________.

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

The ________ traces out the points for which total quantity of goods produced equals total quantity of goods demanded.

Keynes was especially concerned with explaining the ________.

An autonomous appreciation of the Canadian dollar makes Canadian goods ________ expensive relative to foreign goods which ________ net exports in Canada.

What do economists mean by the word "investment"?

Aggregate output is ________ related to autonomous consumer expenditure, and is ________ related to planned investment spending.