What are some examples of changes in the economy that would lead to a movement along the IS curve? What are some changes that would shift the IS  curve?

Q: Can you explain how expectations about future prices and incomes will affect consumption?

A: Consumption measures the total consumption spending by the households on different goods and…

Q: Why might it be important for policy makers to know which in zone of the SRAS curve the economy is?

A: SRAS (Short run aggregate supply): It refers which shows the positive relationship between the…

Q: Changes in price levels induce shifts in the aggregate expenditure function. Which of these is not a…

A: The answer is - Substitution effect

Q: In Japan, from the 1990s to the late 2000s, the interest rates fell to very low levels. However,…

A: (Q) In Japan, from the 1990s to the late 2000s, the interest rates fell to very low levels. However,…

Q: What is the Euler equation for consumption, and what is its economicinterpretation?

A: Consumption: The use of goods and services is called consumption. The consumption of goods and…

Q: What is the Keynesian zone of the SRAS curve? How much is the price level likely to change in the…

A: ANS According to Keynes demand will create its own supply. If aggregate demand changes then would…

Q: What are the financial frictions and how do they affect the IS curve? What role do financial…

A: The most basic concept of a financial friction is a spread between the return earned in businesses…

Q: Why is inventory investment counted as part of aggregate spending if it isn’t actually sold to the…

A: Inventory is the term used for the products available for sale and the raw materials used to make…

Q: How does each of the following infrastructure items affect aggregate supply?   courts and prisons.

A: Aggregate supply is the total quantity of goods and services produced in an economy.

Q: An increase in expected future taxes will cause: the IS curve to shift right in the current period…

A: IS curve depicts the combination of interest rate and output level which clears the goods market…

Q: The IS curve will not shift when which of the following occurs? An increase in government spending.…

A: In economics, the IS-LM model is used by the policymakers to analyze the overall economic condition…

Q: According to the textbook definition, a recession occurs if ___ GDP decreases for ____ Question…

A: If nominal GDP decreases for consecutive 2 quarters,then recession occurs.

Q: Why does the IS curve slope downward? explain

A: Answer to the question is as follows :

Q: Question 8 Two other events that would shift AD to the right are Question 9 and

A: Aggregate demand, on the other hand, calculates the entire dollar worth of the market for every…

Q: What occurs as the economy moves leftward along the a given IS curve

A: Meaning of IS-LM Curve: The term IS-LM curve refers to the combination between market goods and…

Q: Suppose most business executives expect a slowdown in the economy.  How might this situation affect…

A: The loss of business and consumer confidence leads to an economic recession.

Q: On the following graph, plot the aggregate demand curve that results from varying the price level…

A: The aggregate demand curve is a curve that represents the sum of the quantity of all goods and…

Q: Explain what causes shifts in the LM curve.

A: The LM curve is the representation of the money market in the economy which is the short form used…

Q: Briefly explain the reason for the near-vertical shape of the SRAS curve on its far right.

A: SRAS is the short run aggregate supply curve which depicts the relationship between the price(P) and…

Q: What determines the position of the FE line? Give an example of changes in the economy that would…

A: FE line: The full employment line is a vertical line at the full employment level of output. The…

Q: Explain what causes shifts in the IS curve.

A: The IS-LM model was developed by Hicks- Hansen. This model shows the relationship between asset…

Q: what relationship does LM curve plot? explain in words and graphically, why LM curve slops downward.

A: The LM curve is a plot of actual income, Y, and the rate of interest, r, where "L" stands for…

Q: What is macro economics describe briefly?

A: Economics: It is a branch of knowledge that is related to the production, consumption, and transfer…

Q: What relationship does the IS curve capture? Derive the IS curve graphically and show why it slopes…

A: IS curve contains all the points where goods market is in equilibrium.

Q: Explain why aggregate demand (AD) curve is negatively sloped by taking the link between the goods…

A: An Aggregate Demand curve shows the relationship between price level and real GDP/output Aggregate…

Q: What industry sectors are most likely to add jobs during a down economy and an improving economy…

A: A down economy is referred as an economy facing Recession. A period when there is decline in the…

Q: What is the LM curve and why does is it positively slope? Explain the factors which can shift the LM…

A: LM curve:- The LM curve depicts the income and rate of interest pairs wherein the quantity of money…

Q: Stagflation

A: Stagflation is a word which is made by two words: 1. Stagnation 2. Inflation

Q: How does the slope of the AS curve affect the closure of the GDP gap?

A: Deflationary gap can be reduced by incresing aggregate supply.

Q: How does a change in the interest rate affect aggregate investment? What if firms prefer to pay for…

A: The three factors which affect the investment spending of aggregate investment are interest rate,…

Q: What does it mean when the aggregate expenditure line crosses the 45-degree line? In other words,…

A: Aggregate expenditure: - it is the present value of all final goods and services produced in an…

Q: Explain the IS schedule, and how the IS curve is derived in a Closed Economy.

A: The IS bend is the timetable of blends of the interest rate and the degree of income to such an…