Refer to the Following Figure When Answering the Following Questions

question 30

Multiple Choice

Refer to the following figure when answering the following questions.
Figure 11.3: IS Curve
-Consider Figure 11.3. If investment is infinitely interest rate sensitive, the economy would be characterized by:

• A) IS₁.
• B) IS₃.
• C) IS₂.
• D) IS₄.
• E) Not enough information is given.

---

Definitions:

Flow of Funds Accounts

Financial accounts that track the flow of money among various sectors within an economy, helping to analyze financial markets and monetary movements.

Liabilities

Financial obligations or debts that a company or individual owes, which are recorded on the right side of the balance sheet.

Mortgages

A type of loan specifically used for the purchase of real estate, where the property itself serves as collateral against the borrowed funds.

Consumer Credit

A form of credit extended to consumers to finance the purchase of goods or services, often associated with personal loans, credit cards, and lines of credit.