The slope of the IS curve depends on
A) the value of the multiplier and the responsiveness of baseline autonomous spending to real interest rate changes.
B) the value of the multiplier and the responsiveness of investment spending and exports to real interest rate changes.
C) the inverse of the value of the multiplier and the responsiveness of baseline autonomous spending to real interest rate changes.
D) the inverse of the value of the multiplier and the responsiveness of investment spending and exports to real interest rate changes.

Question

Quizplus · Accepted Answer

The slope of the IS curve is influenced by the value of the multiplier and how sensitive investment spending and exports are to changes in the real interest rate. These factors determine how shifts in the interest rate affect overall economic output.

The Slope of the IS Curve Depends on