Homework Answers
As you do not provide the options, so i am giving you the exact reason of the downward sloping shape of IS curve
IS curve is downward sloping because interest rate and investment are negatively related. It means when interest rate rises, investment falls and vice Versa. It is so becaus ewhen interest rate rises the cost of borrowing rises which reduce the investment.
And as investment falls output decreases, So increase in interest rate reduce the output level and vice versa.
That's why IS curve is downward sloping.
ANSWER :
IS curve is downward sloping as income and interest rate are inversely related. When income rises, supply of money rises and interest rate falls and vice versa.
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