Question

Consider a closed economy with consumption function $C = 2 + 0.5𝑌$, where 𝑌 is income. The government expenditure is 3 and investment function is $I = 4 − 0.5r$ , where r is interest rate. Then, the slope of the IS curve will be

• A. 1
• B. -0.5
• C. 1.5
• D. -1

Answer 1

Answer: (D)

-1

Answer 2

The correct answer is (D): -1