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What determines the steepness of the IS curve?
  • a)
    The size of the multiplier and government spending.
  • b)
    The elasticity of the investment demand curve and the size of the multiplier.
  • c)
    Only the size of the multiplier.
  • d)
    Only the elasticity of the investment demand curve.
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
What determines the steepness of the IS curve?a)The size of the multip...
The steepness of the IS curve is determined by both the elasticity of the investment demand curve and the size of the multiplier. A more elastic investment demand curve and a larger multiplier result in a flatter IS curve.
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What determines the steepness of the IS curve?a)The size of the multiplier and government spending.b)The elasticity of the investment demand curve and the size of the multiplier.c)Only the size of the multiplier.d)Only the elasticity of the investment demand curve.Correct answer is option 'B'. Can you explain this answer?
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