The IS curve shows combinations of ______ that are consistent with equilibrium in the market for goods and services.
A) inflation and unemployment
B) the price level and real output
C) the interest rate and the level of income
D) the interest rate and real money balances

Question

Quizplus · Accepted Answer

The IS curve shows combinations of the interest rate and the level of income that are consistent with equilibrium in the market for goods and services. It represents the relationship between aggregate output (Y) and the interest rate (r), where an increase in investment spending, government spending, or consumption leads to a higher level of output and a higher interest rate.

The IS Curve Shows Combinations of ______ That Are Consistent