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Answer to Question #104530 in Macroeconomics for iqra
Question #104530
suppose that the interest elasticity of investment demand is zero.what will be the resulting slope of the IS schedule. explain
Expert's answer
The resulting slope of the IS plot will be vertical. This is an investment trap - this is a situation in which the demand for investments is completely inelastic to the interest rate, so the graph of the investment function becomes vertical
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