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Everything else held constant changes in the interest rate affect planned investment

Everything else held constant, changes in the interest rate affect planned investment spending and hence the equilibrium level of output, but this change in investment spending ________.

A) merely causes a movement along the IS curve and not a shift

B) is crowded out by higher taxes

C) is crowded out by higher government spending

D) is crowded out by lower consumer expenditures

 

 

 

11) A rise in autonomous planned investment spending causes the equilibrium level of aggregate output to ________ and shifts the ________ curve to the ________, everything else held constant.

A) rise; LM; right

B) rise; IS; right

C) fall; IS; left

D) fall; LM; left

 

12) A decline in autonomous planned investment spending causes the equilibrium level of aggregate output to ________ and shifts the ________ curve to the ________, everything else held constant.

A) rise; LM; right

B) rise; IS; right

C) fall; IS; left

D) fall; LM; left

 

13) In the Keynesian cross diagram, a decrease in investment spending because companies become more pessimistic about investment profitability causes the aggregate demand function to shift ________ and the equilibrium level of aggregate output to ________, everything else held constant.

A) up; rise

B) up; fall

C) down; rise

D) down; fall

 

14) In the Keynesian cross diagram, an increase in investment spending because companies become more optimistic about investment profitability causes the aggregate demand function to shift ________ and the equilibrium level of aggregate output to ________, everything else held constant.

A) up; rise

B) up; fall

C) down; rise

D) down; fall

Mar 14 2020 View more View Less

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