Answer 2. An increase in the real interest rate will cause an increase in ______

Question

Answer

2. An increase in the real interest rate will cause an increase in ________.

Answer

3.  IS Curve Exogenous Variables and Parameters

Answer

4.  Investment spending ________.

Answer

5. If disposable income falls, consumption expenditure falls ________.

Answer

U.S. dollar assets earn a higher return relative to foreign assets makes U.S. exports cheaper in foreign currencies imports will decrease All of these None of these When the U.S. real interest rate rises U.S. dollar assets earn a higher return relative to foreign assets makes U.S. exports cheaper in foreign currencies imports will decrease All of these None of these An increase in the real interest rate will cause an increase in saving planned investment net exports All of these None of these IS Curve Exogenous Variables and Parameters Given the values in the table above, the real interest rate r = when equilibrium output Y = 15. 9.8 5 3.18 10 None of these Investment spending is comprised of fixed and inventory investment is negatively related to the real interest rate is heavily influenced by what Keynes coined as "animal spirits" All of these None of these If disposable income falls, consumption expenditure falls by an amount that depends on the real interest rate so that planned expenditure remains constant by an amount smaller than the decrease in disposable income All of these None of these

Explanation / Answer

1.When the U.S. real interest rate rises ________.

Answer

U.S. dollar assets earn a higher return relative to foreign assets

2. An increase in the real interest rate will cause an increase in ________.

Answer

saving

3. IS Curve Exogenous Variables and Parameters

Table 1


Given the values in the table above, the real interest rate r = ________ when equilibrium output Y = 15.

Answer

10

4. Investment spending ________.

Answer

is negatively related to the real interest rate

5. If disposable income falls, consumption expenditure falls ________.

Answer

by an amount smaller than the decrease in disposable income

U.S. dollar assets earn a higher return relative to foreign assets

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