Which of the following will shift IS curve down and to the left?
A)an increase in expected future output
B)a decrease in expected future marginal product of capital
C)a fall in taxes
D)an increase in wealth

Question

Quizplus · Accepted Answer

A decrease in expected future marginal product of capital would reduce current investment, leading to a decrease in aggregate demand and a leftward shift of the IS curve. None of the other options would lead to a downward and leftward shift of the IS curve. An increase in expected future output or wealth would increase current consumption and investment, shifting the IS curve to the right. A fall in taxes would increase disposable income and spending, shifting the IS curve to the right as well.

Which of the Following Will Shift IS Curve Down and to the Left