We can expect the IS-curve to become flatter as

Question

Quizplus · Accepted Answer

The IS-curve represents the combination of interest rates and output levels that keep the goods market in equilibrium. When investment becomes more sensitive to interest rate changes, it means that changes in interest rates have a greater impact on investment decisions, which leads to a larger change in output in response to a given change in interest rates. This makes the IS-curve flatter, as it takes a smaller change in interest rates to achieve a given change in output.

We Can Expect the IS-Curve to Become Flatter as