Answer to Question #209012 in Macroeconomics for Div

Question

If the level of government spending were to decrease by 100 units in the IS – LM schedule

 model, how would this affect the position of the IS schedule? In which direction would the

 schedule shift, and by how many units?

Answer 1

Decreased government spending decreases the output for any given rate. This shifts the IS curve to the left.The output will decrease by 100 units .