A fall in autonomous investment will shift the
A)IS curve to the right toward higher interest rates and output.
B)LM curve to the right towards lower interest rates and higher output.
C)IS curve to the left towards higher interest rates and output.
D)None of the above

Question

Quizplus · Accepted Answer

A fall in autonomous investment would shift the IS curve to the left, leading to lower output and potentially higher interest rates. However, none of the provided options accurately describe this scenario. Option A incorrectly suggests a rightward shift. Option B refers to the LM curve, which is affected by changes in money supply and demand, not investment. Option C incorrectly suggests a shift towards higher output. Therefore, none of the given choices correctly describe the effect of a fall in autonomous investment on the IS curve.

A Fall in Autonomous Investment Will Shift the