The IS Curve Is Negatively Sloped Because

question 25

Multiple Choice

The IS curve is negatively sloped 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:

Incentive

Something that motivates or encourages an individual to perform an action or behavior, potentially stimulating further interest or engagement.

Humanistic

Relates to an approach in psychology that emphasizes the study of the whole person and the uniqueness of each individual.

Arousal

A state of physiological and psychological activation or alertness, which can be triggered by stimuli that are perceived as exciting or challenging.

Parasympathetic

Refers to the part of the autonomic nervous system responsible for relaxation, conservation of energy, and slowing down bodily functions.