Question: First consider the case when is relatively low (close to zero). When this is the case, will It be very sensitive to changes in real
First consider the case when is relatively low (close to zero). When this is the case, will It be very sensitive to changes in real interest rates? Will It constitute a large share of GDP? As a consequence, what can we conclude about how much have we learned about the slope of the IS curve? Hint: Notice that investment is not the only component of aggregate demand that determines the IS curve
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
