A lower interest elasticity of investment demand leads to a
A)steeper IS curve.
B)flatter IS curve.
C)steeper LM curve.
D)flatter LM curve.

Question

Quizplus · Accepted Answer

A lower interest elasticity of investment demand means that investment is less responsive to changes in the interest rate, which results in a steeper IS curve because changes in interest rates have a smaller effect on the level of income and output.

A Lower Interest Elasticity of Investment Demand Leads to a