For each of the following changes, identify whether there will be a shift in the IS curve or a movement along the IS curve. In each case identify the direction of the movement or shift
a. The real interest rate decreases.
b. The government decreases tax rates.
c. Government spending decreases.
d. Investors become optimistic about future profitability.
a. A decrease in the real interest rate causes a movement down the IS curve.
b. A decreases in taxes will shift the IS curve to the right.
c. A decrease in government spending will shift the IS curve to the left.
d. More optimistic investors will cause the IS curve to shift to the right.
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Suppose that an Intel worker rearranges existing machines and labor and increases the quantity of chips Intel can produce. Using the productivity curve graphed, this innovation would be described as
A) a movement upward along the curve. B) a movement downward along the curve. C) a shift of the curve upward. D) a shift of the curve downward. E) no change to the productivity curve.
Bonds represent:
A. a claim on company dividends. B. ownership of a company. C. all financial assets guaranteed to pay interest. D. loans to governments and corporations.