In Figure 9.5,a movement from Point A to Point B would result from
A)A decrease in wage costs.
B)An increase in the interest rate.
C)An increase in disposable income.
D)An improvement in expectations for future sales.

Question

In Figure 9.5,a movement from Point A to Point B would result from
A)A decrease in wage costs. 
B)An increase in the interest rate. 
C)An increase in disposable income. 
D)An improvement in expectations for future sales.

Quizplus · Accepted Answer

According to the graph, a movement from point A to point B would result from an improvement in expectations for future sales. This can be seen by the upward shift of the IS curve, which represents an increase in planned spending due to higher expected future income. Changes in wage costs, interest rates, and disposable income would result in movements along the same IS curve, not a shift to a new curve.