The IS curve ________.
A) shows the relationship between aggregate output and the real interest rate when the goods market is in equilibrium
B) tells us that increases in autonomous consumption, investment, government purchases, or net exports raise output for any real interest rate
C) tells us that a decrease in taxes leads to increases in output for any given real interest rate
D) all of the above
E) none of the above

Question

Quizplus · Accepted Answer

The IS curve represents the equilibrium in the goods market, showing the relationship between aggregate output and the real interest rate. It also indicates that increases in autonomous spending components (like consumption, investment, government purchases, or net exports) or a decrease in taxes will increase output for any given real interest rate.

The IS Curve ________