IS Graph 2
-On the graph above,a possible cause of the rightward shift of the IS curve is an increase in ________.
A)foreign demand for domestic goods
B)taxes
C)domestic demand for foreign goods
D)the exchange rate
E)none of the above

Question

IS Graph 2 
-On the graph above,a possible cause of the rightward shift of the IS curve is an increase in ________.
A)foreign demand for domestic goods 
B)taxes 
C)domestic demand for foreign goods 
D)the exchange rate 
E)none of the above

Quizplus · Accepted Answer

An increase in foreign demand for domestic goods would result in an increase in exports, which would shift the IS curve to the right. This is because an increase in exports increases national income and output, which in turn increases the demand for goods and services, thus causing the IS curve to shift to the right. None of the other options mentioned in the answer choices would cause a rightward shift in the IS curve.