An increase in the expected profitability of investment will cause
A) the IS curve to shift right.
B) the IS curve to shift left.
C) the MP curve to shift upward.
D) the MP curve to shift downward.
The level of potential GDP
A) increases as the real rate of interest decreases.
B) increases as the real rate of interest increases.
C) is unaffected by the real rate of interest.
D) is represented on the IS-MP model by a horizontal line at the world real rate of interest.
What effect would economic weakness in Europe due to a sovereign debt crisis have on the U.S.economy?
A) The IS curve shifts to the right.
B) The IS curve shifts to the left.
C) Potential GDP increases.
D) Potential GDP decreases.
An increase in the real interest rate causes
A) the IS curve to shift to the right.
B) the IS curve to shift to the left.
C) a movement up the IS curve.
D) a movement down the IS curve.