What Is the IS Relation? Explain Why IS Curve Is

question 18

Essay

What is the IS relation? Explain why IS curve is downward sloping.

---

Definitions:

Market Rate

The prevailing price determined by supply and demand in the open market for services or commodities.

Interest

The payments made for the use of money.

Interest Rate

The interest rate is the amount charged by a lender to a borrower for the use of assets expressed as a percentage of the principal, often noted annually.

Total Investment

The overall amount of money allocated to purchasing assets or towards spending that is intended to generate future revenue.