An interpretation of why the IS curve slopes downward and to the right is that as income rises,national saving rises,and this increase drives the interest rate:
A) down,thereby decreasing investment.
B) down,thereby increasing investment.
C) up,thereby decreasing investment.
D) up,thereby increasing investment.

Question

Quizplus · Accepted Answer

As income rises, national saving increases, which leads to a decrease in the interest rate. A lower interest rate encourages more investment, which is why the IS curve slopes downward and to the right.

An Interpretation of Why the IS Curve Slopes Downward and to the Right