If the level of government spending, G, decreases, the IS curve will:
A)shift up.
B)shift down.
C)rotate.
D)none of the above.

Name: If the level of government spending, G, decreases, the IS curve will: A)shift up. B)shift down. C)rotate. D)none of the above.
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Question

Quizplus · Accepted Answer

A decrease in government spending shifts the IS curve down because it decreases overall aggregate demand, reducing output and shifting the equilibrium point to a lower level of output and a lower interest rate.

If the Level of Government Spending, G, Decreases, the IS