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In the IS-LM model, what does the IS curve represent?
  • a)
    The relationship between real money supply and interest rates.
  • b)
    The relationship between consumption and income.
  • c)
    The relationship between investment and interest rates.
  • d)
    The relationship between government expenditure and taxes.
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
In the IS-LM model, what does the IS curve represent?a)The relationshi...
The IS curve in the IS-LM model depicts the relationship between investment and interest rates. It shows the combinations of income and interest rates that equate aggregate demand with aggregate supply in the goods market.
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In the IS-LM model, what does the IS curve represent?a)The relationship between real money supply and interest rates.b)The relationship between consumption and income.c)The relationship between investment and interest rates.d)The relationship between government expenditure and taxes.Correct answer is option 'C'. Can you explain this answer?
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