Economics Q103
0. A decrease in government spending would most likely shift the:
- Option : B
- Explanation : The IS curve represents the combinations of income and the real interest rate at which planned expenditure equals income. Equivalently, it represents combinations such that S (Y) = I (r) + (G – T) + (X – M), where S (Y) indicates that planned saving is a (increasing) function of income and I (r) indicates that planned investment is a (decreasing) function of the real interest rate.
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