The IS Curve Is Negatively Inclined Because

question 7

Multiple Choice

The IS curve is negatively inclined because:

• A)the higher is the rate of interest the smaller is the quantity of money demanded for speculative purposes
• B)higher rates of interest lead to greater capital flows
• C)at lower interest rates the levels of investment and national income are higher
• D)at lower interest rates the level of national income is lower

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Definitions:

Cash Flow Statement

A report summarizing the total cash entering a company from operational activities and external investments, alongside the total cash spent on business operations and investments within a specific timeframe.

Productive Asset

An asset used in the operations of a business that contributes to its ability to generate revenue, such as machinery, buildings, and equipment.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset since it was put into use.

Selling Price

The amount of money for which a product or service is offered for sale to customers.