The IS curve has a
A. negative slope because a higher interest rate leads to a decrease in government spending which reduces the domestic output level.
B. positive slope because a higher interest rate leads to an increase in aggregate savings and thus an increase in domestic real investment.
C. negative slope because a higher interest rate leads to a decrease in aggregate demand that results in lowering of the domestic production level.
D. positive slope because a higher interest rate leads to an increase in foreign investment and thus raises the level of aggregate income.
Answer: C
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In the figure above, suppose the price of a pound of pecans is negatively related to the quantity of peanuts that farmers are willing to supply. If the price of pecans increases
A) the curve will shift rightward. B) the curve will shift leftward. C) there is a movement along the curve. D) the curve will be unaffected.
It has become largely accepted since the end of the Bretton Woods agreement that: a. the gold standard was superior to anything that has come along since
b. governments have no role whatsoever in determining exchange rates. c. it is not necessary for governments to fix exchange rates for long periods of time. d. floating rates simply have not worked.
A conglomerate merger involves
a. two companies in the same line of business joining together b. a buyer's expanding operations forward toward the final customer c. a buyer's expanding operations backward toward the source of raw material d. companies in unrelated lines of business coming together e. b and c
If the real marginal tax rate increases in the market clearing model then:
a. the supply of labor decreases. b. real output, Y, declines. c. the demand for capital decreases. d. all of the above.