________ shifts the IS curve to the right.
A) An increase in government spending
B) A decrease in government spending
C) An increase in the price level
D) A decrease in the Z factors

Question

Quizplus · Accepted Answer

An increase in government spending will increase the level of overall demand in the economy, leading to an increase in output and shifting the IS curve to the right. A decrease in government spending, on the other hand, would decrease demand and shift the IS curve to the left. An increase in the price level would lead to a movement along the existing IS curve, rather than a shift. A decrease in the Z factors (which could be interpreted as a decrease in productivity, for example) would reduce output and shift the IS curve to the left.

________ Shifts the IS Curve to the Right