Intermediate Macro Chapter 11 - Assignment Essays

question

In 1936, _____ published The General Theory of Employment, Interest, and Money, the book that transformed macroeconomics.
Please choose the correct answer from the following choices, and then select the submit answer button.

answer

John Maynard Keynes

question

According to the text, the _____ is the building block for the LM curve.

answer

Theory of Liquidity Preference

question

If the government purchases increase, then the planned expenditure line:

answer

Shifts upwards

question

The relationship between the interest rate and the level of income where the money market is equilibrium is called the _____ curve.

answer

question

A decrease in taxes or an increase in government spending will:

answer

Shift the IS curve to the right

question

According to the liquidity preference theory:

answer

Both the price level and the supply of money are determined exogenously

question

An increase in taxes will cause the IS curve to:

answer

Shift to the left

question

Suppose that the demand for real balances is (M / P)d = (5Y) - (20r). If the supply of real balances is 400, and the gross domestic product is 90, then the equilibrium interest rate is:

answer

2.5

question

The book that substantially changed macroeconomics in 1936 was:

answer

The General Theory of Employment, Interest, and Money

question

The price level is considered an exogenous variable in the liquidity preference theory because the:

answer

Model studies the short run, in which the price level is fixed

question

An increase in government purchases will cause the IS curve to:

answer

Shift right

question

The LM curve represents a locus of points where the:

answer

Money market is in equilibrium

question

At a point to the left of the IS curve, planned spending _____ actual spending.

answer

Exceeds

question

According to the theory of liquidity preference, the demand for money in the United States is determined by the:

answer

Interest Rate

question

When the economy is producing MORE than the equilibrium level, unplanned inventory:

answer

Investment will occur, and firms will be induced to decrease production

question

The theory of liquidity preference is a model of the determination of:

answer

Interest rates in the short run

question

All else equal, an increase in government purchases by 100 will:

answer

Shift the IS curve to the right by 100/(1-MPC)

question

Suppose that the investment curve is I = 500 - 50r, and that the marginal propensity to consume is 0.8. If the interest rate falls from 5 percent to 3 percent, then the rise in Y required to maintain equilibrium in the goods market is:

answer

500

question

A decrease in taxes will cause the IS curve to:

answer

Shift right

question

A country with a higher marginal propensity to consume will have _____ a country with a lower marginal propensity to consume.

answer

a flatter IS curve than

question

In the liquidity preference theory, the money supply curve is drawn as a ____line in a graph in which real balances are on the x-axis and interest rates are on the y-axis.

answer

Vertical

question

In the Keynesian cross model, suppose that the marginal propensity to consume is 0.75, and both government purchases and taxes are increased by $100. In this case, income will:

answer

Increase by 100

question

According to the liquidity preference theory, a decrease in the money supply will, all else constant, will cause:

answer

A higher equilibrium interest rate

question

An increase in the money supply will cause the LM curve to:

answer

Shift to the right

question

The IS curve is the locus of (Y, r) points where the:

answer

Goods market is in equilibrium

question

The negative relationship between the interest rate and the level of income that give equilibrium in the market for goods and services is called the _____ curve.

answer

question

Suppose that the demand for real balances is (M / P)d = (5Y - (20r). If the point Y = 100, and r = 5 is on the LM curve, and Y = 110, then the value of r giving money market equilibrium is:

answer

7.5

1 of 27

question

answer

John Maynard Keynes

question

According to the text, the _____ is the building block for the LM curve.

answer

Theory of Liquidity Preference

question

If the government purchases increase, then the planned expenditure line:

answer

Shifts upwards

question

The relationship between the interest rate and the level of income where the money market is equilibrium is called the _____ curve.

answer

question

A decrease in taxes or an increase in government spending will:

answer

Shift the IS curve to the right

question

According to the liquidity preference theory:

answer

Both the price level and the supply of money are determined exogenously

question

An increase in taxes will cause the IS curve to:

answer

Shift to the left

question

Suppose that the demand for real balances is (M / P)d = (5Y) - (20r). If the supply of real balances is 400, and the gross domestic product is 90, then the equilibrium interest rate is:

answer

2.5

question

The book that substantially changed macroeconomics in 1936 was:

answer

The General Theory of Employment, Interest, and Money

question

The price level is considered an exogenous variable in the liquidity preference theory because the:

answer

Model studies the short run, in which the price level is fixed

question

An increase in government purchases will cause the IS curve to:

answer

Shift right

question

The LM curve represents a locus of points where the:

answer

Money market is in equilibrium

question

At a point to the left of the IS curve, planned spending _____ actual spending.

answer

Exceeds

question

According to the theory of liquidity preference, the demand for money in the United States is determined by the:

answer

Interest Rate

question

When the economy is producing MORE than the equilibrium level, unplanned inventory:

answer

Investment will occur, and firms will be induced to decrease production

question

The theory of liquidity preference is a model of the determination of:

answer

Interest rates in the short run

question

All else equal, an increase in government purchases by 100 will:

answer

Shift the IS curve to the right by 100/(1-MPC)

question

answer

500

question

A decrease in taxes will cause the IS curve to:

answer

Shift right

question

A country with a higher marginal propensity to consume will have _____ a country with a lower marginal propensity to consume.

answer

a flatter IS curve than

question

In the liquidity preference theory, the money supply curve is drawn as a ____line in a graph in which real balances are on the x-axis and interest rates are on the y-axis.

answer

Vertical

question

In the Keynesian cross model, suppose that the marginal propensity to consume is 0.75, and both government purchases and taxes are increased by $100. In this case, income will:

answer

Increase by 100

question

According to the liquidity preference theory, a decrease in the money supply will, all else constant, will cause:

answer

A higher equilibrium interest rate

question

An increase in the money supply will cause the LM curve to:

answer

Shift to the right

question

The IS curve is the locus of (Y, r) points where the:

answer

Goods market is in equilibrium

question

The negative relationship between the interest rate and the level of income that give equilibrium in the market for goods and services is called the _____ curve.

answer

question

Suppose that the demand for real balances is (M / P)d = (5Y - (20r). If the point Y = 100, and r = 5 is on the LM curve, and Y = 110, then the value of r giving money market equilibrium is:

answer

7.5

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