Exam 20: The Islm Model

Everything else held constant,if total consumption increases from $600 to $800 because of an increase of disposable income of $400,then the mpc is equal to

According to the liquidity preference theory,the demand for money is ________ related to aggregate output and ________ related to interest rates.

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 simple Keynesian model of aggregate output determination,an equilibrium level of output below that necessary to maintain full employment can be explained by

Assume that autonomous consumption equals $200 and disposable income equals $1000.If total consumption equal $800,then the mpc equals

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 ________ the equilibrium level,unplanned inventory investment will remain ________,firms will continue to raise production,and output will continue to rise.

If the economy is on the IS curve,but is to the left of the LM curve,then the ________ market is in equilibrium,but the interest rate is ________ the equilibrium level.

Under Keynesian analysis,aggregate demand can be written as

In a closed economy,aggregate demand is the sum of

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 fall.

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

The ________ describes points for which the goods market is in equilibrium.

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

Equilibrium output is reduced by an increase in

When the IS and LM curves are combined in the same diagram,the intersection of the two curves determines the equilibrium level of ________ as well as the ________.

For every dollar increase in planned investment spending,aggregate output increases by ________.

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.

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 ________.

A difference between inventory investment and fixed investment is that