Consider the following model of the IS curve without an international sector (i.e., imports = exports = 0). Final expenditures are characterized by the following three equations: Consumption: 𝐶 𝑡 𝑌 ¯ 𝑡 = 𝑎 ¯ 𝑐 + 𝑏 ¯ 𝑐 ( 𝑅 𝑡 − 𝑟 ¯ ) Investment: 𝐼 𝑡 𝑌 ¯ 𝑡 = 𝑎 ¯ 𝑖 − 𝑏 ¯ 𝑖 ( 𝑅 𝑡 − 𝑟 ¯ ) Government expenditure: 𝐺 𝑡 = 𝑎 ¯ 𝑔 𝑌 ¯ 𝑡 Assume that ∞ > 𝑏 ¯ 𝑖 > 𝑏 ¯ 𝑐 > 0 . In contrast to the assumptions we made in class, consumption in this version of the model responds to changes in the real interest rate. Based on this information, the IS curve is:单项选择题

A

horizontal.

B

vertical.

C

less steeply sloped than the “standard” IS curve with 𝑏 ¯ 𝑐 = 0 .

D

more steeply sloped than the “standard” IS curve with 𝑏 ¯ 𝑐 = 0 .

E

Not enough information is given.

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类似问题

Everything else held constant, a depreciation of the domestic currency will cause the IS curve to shift to the ________ and aggregate demand will ________.

Using the IS curve 𝑌 ~ 𝑡 = 𝑎 ¯ − 𝑏 ¯ ( 𝑅 𝑡 − 𝑟 ¯ ) , in the long run,  𝑎 ¯ [ Select ] equals 0 equals 1 and 𝑅 𝑡 [ Select ] > < = 𝑟 ¯ , so that [ Select ] the economy's actual output equals potential output. the economy is in a boom the economy is in a recession .

Consider a closed economy with the following IS curve: 𝐼 𝑆 : 𝑌 ~ 𝑡 = 𝑎 ¯ − 𝑏 ¯ ( 𝑅 𝑡 − 𝑟 ¯ )   Suppose we assume 𝑎 ¯ = − 0.01 , 𝑏 ¯ = 3 , 𝑅 𝑡 = 𝑟 ¯ = 0.03 . 𝑌 ~ 𝑡 is short-run output when the real interest rate equals 𝑅 𝑡 and 𝑌 ~ 𝑡 ′ is short-run output when the real interest rate equals 𝑅 𝑡 ′ . If the real interest rate falls from 𝑅 𝑡 to 𝑅 𝑡 ′ = 0.02 , then the change from 𝑌 ~ 𝑡 to 𝑌 ~ 𝑡 ′ is ______ percentage points. Enter a positive number for a rise and a negative number for a drop.

Consider the following model of the IS curve without an international sector: Consumption: 𝐶 𝑡 𝑌 ¯ 𝑡 = 𝑎 ¯ 𝑐 − 𝑏 ¯ 𝑐 ( 𝑅 𝑡 − 𝑟 ¯ ) ; Investment: 𝐼 𝑡 𝑌 ¯ 𝑡 = 𝑎 ¯ 𝑖 − 𝑏 ¯ 𝑖 ( 𝑅 𝑡 − 𝑟 ¯ ) ; and Government expenditure: 𝐺 𝑡 = 𝑎 ¯ 𝑔 𝑌 ¯ 𝑡 . Note that 𝑏 ¯ 𝑐  can be a positive or negative real number. With this formulation, the IS curve is:

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