ECON 315 Macroeconomic theory HW.docx

Decreases downward when drawn on a graph with income

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decreasing income. - decreases; downward When drawn on a graph with income along the horizontal axis and the interest rate along the vertical axis, the IS curve generally: - slopes downward and to the right
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The IS curve plots the relationship between the interest rate and ____ that arises in the market for ____. - national income; goods and services The IS curve shifts when any of the following economic variable change except: - the interest rate An increase in taxes shifts the IS curve, drawn with income along the horizontal axis and the interest rate along the vertical axis: - downward and to the left Along the IS curve all of the following are always true except: - the demand for real balances equals the supply of real balances. The IS curve shows combination of ____ that are consistent with the equilibrium in the market for goods and services. - the interest rate and the level of income According to the theory of liquidity preference, the supply of nominal money balances: - is chosen by the central bank. The theory of liquidity preferences implies that: - as the interest rate rises, the demand for real balances will fall.
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