Question: Problem 4: IS Relation 4a. What does IS mean here? 4b. Which market equilibrium does IS describe? 4c. If the interest rate goes up, how

Problem 4: IS Relation

4a.

What does IS mean here?

4b.

Which market equilibrium does IS describe?

4c.

If the interest rate goes up, how would consumption change. Explain why.

4d.

If the interest rate goes up, how would investment change. Explain why.

4e.

Derive the IS curve graphically.

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