The IS curve shifts when any of the following economic variables change except:
A) the interest rate.
B) government spending.
C) tax rates.
D) the marginal propensity to consume.

Question

Quizplus · Accepted Answer

The IS curve represents the relationship between the interest rate and the level of income that brings the goods market into equilibrium. It shifts due to changes in government spending, tax rates, and the marginal propensity to consume, but not due to changes in the interest rate itself; changes in the interest rate move along the curve, not shift it.

The IS Curve Shifts When Any of the Following Economic