Consider the IS-LM model. Suppose the LM curve is positively sloped. Planned investment expenditure is exogenously given. Saving is simply an increasing function of aggregate income. There always exists a level of income at which saving is equal to investment. Assume that there is no government expenditure and net exports are zero. Which of the following statements is necessarily true?
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IS-LM model has come up 137 times in 7 exams since 2004.
This question is on The slope of the IS curve, part of IS-LM model in Macroeconomics.
What makes the IS curve steep or flat, including the multiplier and the interest sensitivity of investment.
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Question from the JNU SSS 2018 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.