Question

In the IS curve, if Y increases for any given level of the real interest rate

a.None of the above
b.Consumption increases
c,Output decreases
d.All of the above
e.Saving decreases

Answer 1

In the IS curve, if Y increases for any given level of the real interest rate, output decreases. Therefore, the correct option is C.

Step-by-step explanation:

The correct answer is c) Output decreases. In the IS (Investment-Savings) curve, an increase in income (Y) for any given level of the real interest rate will lead to a decrease in output. This is because as income increases, consumption will also increase, which means that households will save less. As a result, there will be less saving available for investment, leading to a decrease in output.