A rise in expected future output that doesn't affect labour supply would shift the IS curve ________ and the FE line ________.
A)down;is unchanged
B)down;right
C)up;is unchanged
D)up;right

Question

Quizplus · Accepted Answer

A rise in expected future output increases current consumption, shifting the IS curve up. Since labor supply is unaffected, the FE line remains unchanged.

A Rise in Expected Future Output That Doesn't Affect Labour