Refer to Figure 3 below.Which statement about the two possible IS curves in Figure 3 is true? Figure 3
A) The economy is in equilibrium where IS₁ and IS2 intersect.
B) IS₁ represents an economy in which consumers' expenditure and investment spending are more sensitive to interest rate changes than they are in the economy represented by IS2.
C) IS₁ represents an economy in which consumers' expenditure and investment spending are less sensitive to interest rate changes than they are in the economy represented by IS2.
D) None of the above is true.
Correct Answer:
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