We May Infer from the Downward Slope of the IS

question 55

Multiple Choice

We may infer from the downward slope of the IS curve that lower interest rates are associated with ________.

• A)higher output
• B)higher saving and/or lower net exports
• C)higher investment
• D)all of the above
• E)none of the above

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Definitions:

Saving

The portion of income that is not spent on consumption but rather set aside for future use, often in investments or deposit accounts.

Disposable Income

The net income available to individuals or households after all taxes have been deducted, which can be spent on consumption or savings.

Autonomous Consumption

Represents the amount of consumption that occurs no matter the level of disposable income, indicating basic living expenses.

Disposable Income

The amount of income available to households after taxes and social security charges have been deducted, available for spending or saving.