The IS curve ________ when the real interest rate increases.
A)shifts to the right
B)shifts to the left
C)shifts up
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

The IS curve does not shift when the real interest rate increases; instead, it moves along the curve. An increase in the real interest rate typically leads to a movement up along the IS curve, indicating lower levels of investment and output.

The IS Curve ________ When the Real Interest Rate Increases