When drawn against the real interest rate, the output demand curve shifts to the right when
A)future taxes increase.
B)the real interest rate increases.
C)both future and current taxes increase.
D)future income increases.
E)the real interest rate decreases.

Question

Quizplus · Accepted Answer

The output demand curve shifts to the right when future income increases because it leads to an increase in consumption and investment demand at any given real interest rate.

When Drawn Against the Real Interest Rate, the Output Demand