1 Introduction to Macroeconomics
2 Measuring the Macroeconomy
3 An Overview of Long-Run Economic Growth
4 A Model of Production
5 The Solow Growth Model
6 Growth and Ideas
7 The Labor Market, Wages, and Unemployment
8 Inflation
9 An Overview of the Short-Run Model
10 The IS Curve
11 Monetary Policy and the Phillips Curve
12 Stabilization Policy and the AS/AD Framework
13 The Global Financial Crisis: Overview
14 The Global Financial Crisis and the Short-Run Model
15 The Government and the Macroeconomy
16 International Trade
17 Exchange Rates and International Finance
18 Parting Thoughts

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Chapter 10: The IS Curve

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Review Questions

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    What role does the IS curve play in our short-run model? What kind of economic questions does it allow us to analyze?

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    Why does the IS curve slope downward?

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

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    For the development of the rest of the short-run model in the next two chapters, we could just present the equation for the IS curve and omit the six equations and six unknowns that allowed us to derive the curve. Why, however, do you think the underlying setup of the economy might prove useful?

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    What are three insights you gained from studying the microfoundations of the IS curve?

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    Why is the relationship between output and the real interest rate called the “IS curve”?




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