Exam 20: The Islm Model

Keynes's motivation in developing the aggregate output determination model stemmed from his concern with explaining

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

In the Keynesian cross diagram,the point at which the aggregate demand function crosses the 45 degree line indicates the

Keynes believed that changes in autonomous spending were dominated by unstable fluctuations in ________,which are influenced by emotional waves of optimism and pessimism-factors he referred to as "animal spirits."

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

Because inflation was not a serious problem during the Great Depression,Keynes's analysis assumed

Everything else held constant,if disposable income increases by 200 and consumption expenditure increases by 150,the mpc is

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

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

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

If the income multiplier is 4,the value of the marginal propensity to consume is