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 decreases, 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 decreases, the economy moves from:

Quizplus · Accepted Answer

If the domestic real interest rate decreases, the investment demand increases which shifts the IS curve to the right. This causes an increase in output and a rise in the price level. This movement starts from point d and ends at point c where the new equilibrium is established with higher output and a higher price level.

Refer to the Following Figure When Answering