Questions

Explain the Keynesian cross. What variables are exogenous to this model? What is planned and actual expenditures, and how do they affect inventories? According to this model, why can national income become stuck at a level that is suboptimal?

Explain the effect of the government purchases multiplier and the tax multiplier on national income.

What is the effect of an increase in taxes on the interest rate, income, consumption, and investment?

What is the impact of a decrease in the money supply on the interest rate, income, consumption, and investment?

What models and attendant variables are combined in the IS curve?