The Main Reason for the IS Curve Having a Downward

question 87

Multiple Choice

The main reason for the IS curve having a downward slope is

• A)higher output raises saving,which leads to a lower market-clearing interest rate.
• B)higher output raises saving,which leads to a higher market-clearing interest rate.
• C)higher output decreases saving,which leads to a lower market-clearing interest rate.
• D)higher output decreases saving,which leads to a higher market-clearing interest rate.

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Definitions:

Founded

The act of establishing something, such as a company or organization, often marking its beginning.

Bretton Woods System

A monetary management system established in 1944 which set up fixed exchange rates for major currencies, with the US dollar convertible to gold, and led to the creation of the IMF and World Bank.

Fixed Exchange Rates

A system where the value of a currency is pegged to another currency, a basket of currencies, or a commodity such as gold, and does not fluctuate in the foreign exchange market.

Gold Standard

A monetary system in which the standard unit of currency is based on a fixed quantity of gold, ensuring stability and trust in currency value.