New Enroll in RBI Grade B New Batch - Starts on May 21

    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. Correct Answer Incorrect Answer
    B The relationship between interest rate and level of income that equates savings and investment. Correct Answer Incorrect Answer
    C The relationship between price level and level of income that equates demand and supply. Correct Answer Incorrect Answer
    D The relationship between government spending and level of income that equates aggregate demand and aggregate supply. Correct Answer Incorrect Answer
    E The relationship between tax rates and level of income that maximizes government revenue. Correct Answer Incorrect Answer

    Solution

    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.

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