Consider the Following Model of the IS Curve Without an International

question 89

True/False

Consider the following model of the IS curve without an international sector:
Consumption: $C _ { t } = \bar { a } _ { c } \bar { Y } _ { t };$
Investment: $I _ { t } = a _ { i } \bar { Y } _ { t };$
Government expenditure: $G _ { t } = \bar { a } _ { g } \bar { Y } _ { t }$
.
With this formulation, the IS curve is horizontal.

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Definitions:

Operating Activities

Activities that are directly related to the running of a business and its day-to-day functions, generating most of its revenue and expenses.

Financing Activities

Transactions and events where a business raises funds to support its operations and expansions, often through borrowing or equity issuance.

Operating Activities

Activities that constitute the primary or main activities of a business, including sales, services, and day-to-day operations.

Merchandise Inventory

The total value of a retailer's or wholesaler's goods on hand at the end of an accounting period, available for sale to customers.