Refer to the following figure when answering
Figure 20.3: IS Curve
-Consider Figure 20.3. If the economy initially is at its long-run equilibrium and the domestic real interest rate increases, the economy moves from:

Question

Refer to the following figure when answering  
Figure 20.3: IS Curve 
-Consider Figure 20.3. If the economy initially is at its long-run equilibrium and the domestic real interest rate increases, the economy moves from:

Quizplus · Accepted Answer

If the domestic real interest rate increases, it causes a decrease in investment and consumption. As a result, aggregate demand decreases, and the economy moves from point d to point b, which represents a lower level of output and a higher level of domestic real interest rate.

Refer to the Following Figure When Answering