The Kenyan government constructs a new intercity highway. As a result:
A)there is a movement down and to the right along the IS curve.
B)there is a movement up and to the left along the IS curve.
C)the IS curve shifts to the right.
D)the IS curve shifts to the left.

Question

Quizplus · Accepted Answer

The construction of the new intercity highway will increase investment and economic activity in the region, leading to an increase in output and income. This will result in a shift to the right of the IS curve, as the equilibrium level of output at each interest rate will increase.

The Kenyan Government Constructs a New Intercity Highway