The IS curve will not shift when which of the following occurs?

Question

Quizplus · Accepted Answer

The IS curve represents the equilibrium level of output at different interest rates. A decrease in the interest rate will lead to an increase in investment and consumption, which will shift the aggregate demand curve to the right. However, it will not shift the IS curve since the interest rate is already included in the equation for the IS curve. The other options will shift the IS curve because they affect one or more components of aggregate demand, and therefore affect the equilibrium level of output at each interest rate.

The IS Curve Will Not Shift When Which of the Following