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