Question

explain in words how and why the multiplier G and the interest sensitivity of aggregate demand affect the Slope of a curve​

Answer 1

Answer:

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Explanation:

If aggregate demand becomes more sensitive to interest rates, any change in the interest rate causes the [C+I+G+NX]-line to shift up by a larger amount and, given a certain size of the expenditure multiplier α, this will increase equilibrium income by a larger amount. As a result, the IS-curve will become flatter.

Answer 2

Explanation:

If aggregate demand becomes more sensitive to interest rates, any change in the interest rate causes the [C+I+G+NX]-line to shift up by a larger amount and, given a certain size of the expenditure multiplier α, this will increase equilibrium income by a larger amount. As a result, the IS-curve will become flatter.