The slope of the IS curve tells us
A) the value that real GDP would attain if the real interest rate were at its equilibrium value.
B) the value that real GDP would attain if the real interest rate were zero.
C) the responsiveness of equilibrium real GDP to changes in the long-term, risky, real interest rate.
D) the responsiveness of equilibrium real GDP to changes in the short-term, risky, nominal interest rate.

Question

Quizplus · Accepted Answer

The slope of the IS curve represents the responsiveness of equilibrium real GDP to changes in the real interest rate, specifically indicating how investment and spending decisions are affected by interest rate changes.

The Slope of the IS Curve Tells Us