The slope of the IS curve is dependent upon:
A) the marginal propensity to save
B) the slope of the expenditure line from which it is derived.
C) how often the central bank changes interest rates.
D) the proportionate change in autonomous spending
E) the responsiveness of consumption and investment to changes in interest rates.

Question

Quizplus · Accepted Answer

The slope of the IS curve is determined by the responsiveness of consumption and investment to changes in interest rates. A higher responsiveness leads to a steeper slope, indicating a greater impact of interest rate changes on the level of output. Therefore, choice E is the best answer.

The Slope of the IS Curve Is Dependent Upon