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      Question

      When the expected future marginal product of capital

      increases, then the IS  curve   
      A shifts up and to the right Correct Answer Incorrect Answer
      B shifts down and to the left Correct Answer Incorrect Answer
      C becomes steeper Correct Answer Incorrect Answer
      D becomes flatter Correct Answer Incorrect Answer

      Solution

      This shift occurs because the increase in investment demand at each interest rate increases overall demand, moving the IS curve to the right.

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