In the keynesian cross diagram a decrease in

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16) 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 _____, the equilibrium level of aggregate output to fall, and the IS curve to shift to the _____. (a) up; left (b) up; right (c) down; left (d) down; right Answer: C Question Status: Previous Edition 17) 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 down, the equilibrium level of aggregate output to _____, and the IS curve to shift to the _____.
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864 Frederic S. Mishkin • Economics of Money, Banking, and Financial Markets, Seventh Edition 18) 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 up, the equilibrium level of aggregate output to _____, and the IS curve to shift to the _____. 19) A decrease in fully autonomous investment, other things equal, shifts the _____ curve to the _____. 20) In the ISLM framework, the decrease in investment spending believed by Keynes to be the cause of the Great Depression would be illustrated by a shift of the _____ curve to the _____. (a) IS; right (b) IS; left (c) LM; left (d) LM; right Answer: B Question Status: Previous Edition 21) An increase in government spending causes the equilibrium level of aggregate output to _____ at any given interest rate and shifts the _____ curve to the _____. 22) A reduction in government spending causes the equilibrium level of aggregate output to _____ at any given interest rate and shifts the _____ curve to the _____. Chapter 24 Monetary and Fiscal Policy in the ISLM Model 865 23) Increases in government spending increase interest rates and aggregate output. In the ISLM framework, this is a _____ shift of the _____ curve.
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