IS Curve

Higher, more, decreasing

A rise in real interest rates leads to a _________ value of the dollar, which makes US exports _______ expensive, ___________ net exports.

C + I + G + NX

Aggregate demand (Y) = ?

Movement

An increase in the real interest rate results in a _____________ along the IS curve.

Inventory Investment

spending by firms on additional holdings of raw materials, parts, and finished goods

Marginal Propensity to Consume

the change in consumption expenditure that results from an additional dollar of disposable income

Disposable Income

the total amount of income available for spending

Aggregate Demand

total amount of output demanded in an economy

Inventory, Fixed

Some _______ investment can be unplanned, but __________ investment is always planned.

Aggregate output, real interest rate

The IS curve shows the relationship between _________ ____________ and the ______ ____________ _______ when the goods market is in equilibrium.

NX - xr

What is the equation for net exports?

Taxes, Financial Frictions

Which factors that shift the IS curve have negative relationship with aggregate output?

Autonomous Consumption, Autonomous Investment, Autonomous Net Exports, Government Spending

Which factors that shift the IS curve have positive relationship with aggregate output?

Autonomous Consumption Expenditure

amount of consumption spending that is exogenous

Consumption Function

C + (mpc x [Y-T])

Falls, decrease, lower

As the real interest rate rises, planned investment spending and net exports ______, which in turn _________ aggregate demand. So, aggregate output must be _________ to satisfy the goods market equilibrium.

Optimism

Autonomous consumption is related to consumers' ____________ about their future income and household wealth.

I - d(r + f)

What is the investment function?

Low

When the real interest rate for investments is high, planned investment spending will be ______.

Autonomous Spending

Changes in the ___________ ___________ portions of the IS curve show a shift in the curve.

Positively, negatively

The equation for net exports tells us that net exports are ___________ related to autonomous net exports, and _________ related to the level of real interest rates.

Financial frictions

additions to the real cost of borrowing caused by barriers to the efficient functioning of financial markets

Autonomous

planned investment spending that is exogenous and influenced by unexplained variables

Fixed Investment

planned spending by firms on equipment, structures, and planned new residential housing