Exhibit 8-9 Investment expenditures

In Exhibit 8-9, which of the following could cause the shift from I₁ to I₂?

Question

Exhibit 8-9 Investment expenditures In Exhibit 8-9, which of the following could cause the shift from I₁ to I₂?

Quizplus · Accepted Answer

A shift from I₁ to I₂ indicates an increase in investment expenditures. Lower interest rates could stimulate investment by lowering the cost of borrowing, causing the movement along the IS curve. Lower money holdings, expectations of a future economic slow-down, or lower disposable income would have the opposite effect on investment expenditures and shift the IS curve downward, not upward.

Exhibit 8-9 Investment Expenditures