In the simple IS curve analysis, which of the following includes both the real interest rate and the potential output?
A) exports
B) consumption
C) government expenditures
D) investment
E) imports

Question

Quizplus · Accepted Answer

In the simple IS curve analysis, investment includes both the real interest rate (as it affects the cost of borrowing for investments) and the potential output (as it reflects the overall level of economic activity and future profitability prospects). The other options (exports, consumption, government expenditures, and imports) do not encompass both variables.

In the Simple IS Curve Analysis, Which of the Following