The Yd(IS)curve is downward sloping to reflect the
A)positive relationship between aggregate output and employment.
B)negative relationship between aggregate output and the real wage rate.
C)positive relationship between aggregate output and the real wage rate.
D)negative relationship between aggregate output and the real interest rate.
E)positive relationship between aggregate output and total factor productivity.

Question

Quizplus · Accepted Answer

The Yd(IS) curve, also known as the IS curve in macroeconomics, is downward sloping because it represents a negative relationship between aggregate output (or income) and the real interest rate. When the real interest rate decreases, investment spending increases, leading to a higher level of aggregate output or income.

The Yd(IS)curve Is Downward Sloping to Reflect the