Refer to the following figure when answering the following questions.
Figure 11.6: IS Curve
-Consider the IS curve in Figure 11.6. Holding the real interest rate constant, beginning at point e, if there is an aggregate demand shock:
A) the IS curve shifts right to point c.
B) the IS curve shifts right to point a.
C) the IS curve shifts left to point g.
D) there is a movement along the IS curve to point d.
E) Not enough information is given.

Question

Refer to the following figure when answering the following questions.
Figure 11.6: IS Curve 
-Consider the IS curve in Figure 11.6. Holding the real interest rate constant, beginning at point e, if there is an aggregate demand shock:
A) the IS curve shifts right to point c. 
B) the IS curve shifts right to point a. 
C) the IS curve shifts left to point g. 
D) there is a movement along the IS curve to point d. 
E) Not enough information is given.

Quizplus · Accepted Answer

Without the specific details of Figure 11.6 and the nature of the aggregate demand shock, it is not possible to determine the direction or magnitude of the shift or movement on the IS curve.

Refer to the Following Figure When Answering the Following Questions