An Explanation for the Slope of the IS Curve Is

question 106

Multiple Choice

An explanation for the slope of the IS curve is that as the interest rate increases, the quantity of investment ______, and this shifts the expenditure function ______, thereby decreasing income.

• A) increases; downward
• B) increases; upward
• C) decreases; upward
• D) decreases; downward

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Definitions:

Vested Benefits

Employee benefits, such as pension funds or stock options, that are fully granted and cannot be forfeited even if the employment is terminated.

Projected Benefit Obligation

A liability amount that represents an estimate of the total future pensions benefits earned by employees, adjusted for expected future salary increases.

Pension Benefit Guaranty Corporation

A U.S. government agency that protects the retirement incomes of American workers in private sector defined benefit pension plans.

Defined Benefit Pension Plans

Retirement plans promising a specific benefit at retirement, which is usually calculated through formulas involving salary and years of service.