Refer to Figure 3 Below

question 39

Multiple Choice

Refer to figure 3 below. Which statement about the two possible IS curves in figure 3 is true? Figure 3

• A) The economy is in equilibrium where IS₁ and IS₂ intersect.
• B) IS₁ represents an economy in which consumers' expenditure and investment spending are more sensitive to interest rate changes than they are in the economy represented by IS₂.
• C) IS₁ represents an economy in which consumers' expenditure and investment spending are less sensitive to interest rate changes than they are in the economy represented by IS₂.
• D) None of the above is true.