Answer-What does the term 'IS curve' represent in the ISLM model?

Q: Answer-What does the term 'IS curve' represent in the ISLM model?

The IS curve represents the relationship between interest rate and level of income that equates savings and investment, showing the equilibrium in the goods market.

Question

What does the term "IS curve" represent in the ISLM

model?

A The relationship between interest rate and level of income that equates the demand for and supply of money.

B The relationship between interest rate and level of income that equates savings and investment.

C The relationship between price level and level of income that equates demand and supply.

D The relationship between government spending and level of income that equates aggregate demand and aggregate supply.

E The relationship between tax rates and level of income that maximizes government revenue.

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What does the term "IS curve" represent in the ISLM

Solution