What cause the IS curve to shift?
The IS curve shifts when any of the factors which were held constant when drawing the curve changes. These are the autonomous components of expenditure i.e. Co. Io, Go (and if we have a lump sum tax it will include To).
Recall the concept of the paradox of thrift which you learnt in Introduction to Economics. What is the paradox of thrift and how does the fact that people want to save more affect the IS curve?
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