A vertical IS curve comes from the assumption that changes in the interest rate do NOT affect
A)money demand.
B)the money supply.
C)autonomous planned spending.
D)the LM curve.

Question

Quizplus · Accepted Answer

A vertical IS curve implies that changes in the interest rate do not affect autonomous planned spending, meaning investment and consumption decisions are insensitive to interest rate changes. This is in contrast to the typical assumption that higher interest rates reduce investment and consumption.

A Vertical IS Curve Comes from the Assumption That Changes