Macro- & Monetary Economics

Prio: Normal, Part II: Keynes, Type: MC, Quiz 2

In Keynesian theory (sticky wage), the IS curve represents all real interest rate and real income combinations where there is equilibrium on the goods market. Thus, any point to the left of the IS curve is an interest rate-income combination where

  • Investment exceeds savings: a rise in the interest rate leads to equilibrium
  • Investment exceeds savings: a fall in income leads to equilibium
  • Savings exceeds investment: a rise in income leads to equilibrium
  • Saving exceeds investment: a fall in the interest rate leads to equilibrium
 

Diskussion