The opportunity cost of funds is the interest that can be earned by lending the funds

For simplicity, the IS model assumes that neither net exports nor net taxes vary with income. A more realistic (and complicated) model would drop such assumptions. How would the behavior of the IS curve differ in the more realistic model?

What will be an ideal response?

After taking out a one year loan with an annual interest rate of 5 percent, Tommy pays $2,100 back to the bank. The principal of the loan must be ________ and the interest payment must be ________.

A. $2,100; $100 B. $100; $2,000 C. $2,000; $100 D. $100; $2,100