Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / Which of the following will shift the IS curve down and to the left? an increase in wealth a fall in taxes a decrease in expected future marginal product of capital an increase in expected future output
Which of the following will shift the IS curve down and to the left? an increase in wealth a fall in taxes a decrease in expected future marginal product of capital an increase in expected future output
Option (3).
Lower expected marginal product of capital reduces expected productivity, which decreases business investment, shifting IS curve to left.
Higher wealth increases consumption, shifting IS curve to right (1 is wrong).
Lower tax increases consumption, shifting IS curve to right (2 is wrong).
Increase in future output makes firms invest more now, shifting IS curve to right (4 is wrong).
