The position of the IS curve depends on
A) the baseline level of autonomous spending times the multiplier.
B) the baseline level of autonomous spending times the marginal to expend.
C) the baseline level of autonomous spending divided by the multiplier.
D) the baseline level of autonomous spending divided by the marginal propensity to expend.

Question

Quizplus · Accepted Answer

The IS curve, which represents the relationship between interest rates and the level of income that brings the goods market into equilibrium, depends on the baseline level of autonomous spending times the multiplier. This is because the multiplier amplifies the effects of changes in autonomous spending on the overall level of economic activity.

The Position of the IS Curve Depends on