Question

feature of IS curve​

Answer 1

Explanation:

The IS curve is a locus of points showing alternative combinations of interest rates and income (output) at which the goods market clears. That is why the IS curve is called the goods market equilibrium schedule.

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Answer 2

Investment-Savings curve(IS curve) is a graphical curve.IS curve shows the relationship between interest rate and GDP or National Output with reference to the fluctuations in Aggregate Demand(AD).

Explanation:

Main features of IS curve:-

• IS curve ideally illustrates the changes in the GDP or national output relative to the changes in the interest rate in the economy.
• The slope of the IS curve is negative implying that as interest rate increases the capital or business investment in the economy declines leading to the observation that as interest rate rises,GDP falls as capital investment is a component of GDP as well.
• The shift in IS curve is caused by fluctuations or changes in any of the components of AD or GDP such as aggregate consumption expenditure,aggregate capital investment or aggregate government purchase/expenditure.
• If any of the aforementioned components expands,the IS curve shifts to the right implying an increase in the output level or GDP and vise versa.
• The right side of the IS curve denotes excess supply and the left side of the curve represents excess demand.