Which of the following describes the investment function in the IS curve?
A) $I _ { t } = a _ { i } \tilde { Y } _ { t }$
B) $I _ { t } / \bar { Y } _ { t } = \bar { a } _ { t } - \bar { b } \left( R _ { t } - \bar { r } \right)$
C) $I _ { t } = a _ { i } \tilde { Y } _ { t } - \bar { b } R _ { t }$
D) $I _ { t } = \bar { a } _ { i }$
E) $I _ { t } = \bar { a } _ { i } \bar { Y } _ { t }$

Question

Quizplus · Accepted Answer

The investment function in the IS curve typically shows investment as a function of the interest rate, where investment decreases as the interest rate increases. Option B reflects this relationship.

Which of the Following Describes the Investment Function in the IS