Refer to the following figure when answering the following questions.
Figure 11.6: IS Curve
-Consider the IS curve in Figure 11.6. If there is a positive aggregate demand shock and interest rates remain constant, the economy will move from point e to point:
A) a.
B) c.
C) d.
D) b.
E) f.

Question

Refer to the following figure when answering the following questions.
Figure 11.6: IS Curve 
-Consider the IS curve in Figure 11.6. If there is a positive aggregate demand shock and interest rates remain constant, the economy will move from point e to point:
A) a. 
B) c. 
C) d. 
D) b. 
E) f.

Quizplus · Accepted Answer

A positive aggregate demand shock shifts the IS curve to the right, indicating an increase in goods and services demand at every interest rate level. If interest rates remain constant, the economy moves along the vertical line representing the unchanged interest rate, from the initial equilibrium point to a new point where the new IS curve intersects this vertical line, which is typically to the right of the initial equilibrium.

Refer to the Following Figure When Answering the Following Questions