If the combination r = 10% and Y = $200 billion is on the IS curve, we know that the combination r = 10% and Y = $300 billion would represent
A) the IS curve shifting to the right.
B) the IS curve shifting to the left.
C) a movement up the IS curve.
D) a movement down the IS curve.

Question

Quizplus · Accepted Answer

If the combination r = 10% and Y = $200 billion is on the IS curve, it means that there is a specific level of investment and saving that results in that level of output. If output were to increase to $300 billion, it would require a higher level of investment to be in equilibrium, and this would result in a rightward shift of the IS curve.

If the Combination R = 10% and Y = $200