The IS curve becomes steeper when
A)government spending is relatively small.
B)the income tax rate in the current period is relatively small.
C)current changes in the real interest rate cause large changes in current real output.
D)changes in the current real interest rate cause small changes in current demand.
E) none of the above

Question

Quizplus · Accepted Answer

The IS curve becomes steeper when changes in the real interest rate cause small changes in current demand, indicating that output is less sensitive to interest rate changes.

The IS Curve Becomes Steeper When