The IS Curve Has A

question 54

Multiple Choice

The IS curve has a:

• A)positive slope because a higher interest rate leads to an increase in foreign investment and thus raises the level of aggregate income.
• B)negative slope because a higher interest rate leads to a decrease in government spending which reduces domestic output level.
• C)negative slope because a higher interest rate leads to a decrease in aggregate demand that results in lowering of domestic production level.
• D)positive slope because a higher interest rate leads to an increase in aggregate savings and thus an increase in domestic real investment.