The Keynesian-cross analysis assumes planned investment:
A) is fixed and so does the IS analysis.
B) depends on the interest rate and so does the IS analysis.
C) is fixed, whereas the IS analysis assumes it depends on the interest rate.
D) depends on expenditure and so does the IS analysis.

Question

Quizplus · Accepted Answer

The Keynesian-cross analysis assumes that planned investment is fixed, regardless of the interest rate. In contrast, the IS (Investment-Saving) analysis assumes that planned investment depends on the interest rate, with higher rates discouraging investment and lower rates encouraging it.

The Keynesian-Cross Analysis Assumes Planned Investment