An Interpretation of Why the IS Curve Slopes Downward and to the Right

question 20

Multiple Choice

An interpretation of why the IS curve slopes downward and to the right is that as income rises,national saving rises,and this increase drives the interest rate:

• A) down,thereby decreasing investment.
• B) down,thereby increasing investment.
• C) up,thereby decreasing investment.
• D) up,thereby increasing investment.

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Definitions:

Financial Statement

A summary report that quantitatively describes the financial health of a company. This includes the balance sheet, income statement, and statement of cash flows.

Deferrals

Accounting method that involves postponing the recognition of certain revenues or expenses until a later accounting period to match them with the period they affect.

Accruals

Expenses and revenues that have been incurred or earned but not yet recorded in the accounts.

Accounting Principle

A rule or guideline in accounting that dictates how financial transactions and elements should be recorded and reported.