The Economy's IS Curve Has a Downward Slope Because

question 38

Multiple Choice

The economy's IS curve has a downward slope because

• A) when output is too high, firms cut investment to reduce inventory
• B) as income rises, consumption rises and saving falls
• C) as interest rates rise, investment decreases
• D) as uncertainty increases, saving rises and consumption falls
• E) as government purchases rise, interest rates fall

---

Definitions:

Direct Materials

Raw materials that are directly incorporated into a finished product and are a significant part of the manufacturing process.

Standard Materials Price

The price set for budgeting purposes for materials in manufacturing, often used in variance analysis.

Standard Materials Price

The pre-determined cost assigned to materials used in production, for budgeting and variance analysis purposes.

Direct Materials

Direct materials are raw materials that are directly traceable to the manufacturing of a product and are a component of the total manufacturing cost.