A change in which of the following variables will cause a shift of the IS curve in the current period?
A) Current taxes.
B) Current output.
C) The current interest rate.
D) All of the above.
E) None of the above.

Question

Quizplus · Accepted Answer

The IS curve represents the relationship between the interest rate and the level of income that brings the goods market into equilibrium. A change in current taxes affects consumer spending and investment, thus shifting the IS curve. Changes in current output and the current interest rate move along the IS curve, not shift it.

A Change in Which of the Following Variables Will Cause