National Savings And Investments
Why is it that an increase in government purchases shifts the IS curve up and to the right?
iam confused because when government purchases increase it reduces desired national saving and from what i understand IS is Investment Savings, therefore if desired national saving decrease shouldnt IS decrease as well causing the curve to shift down and to the left?
thank you
Its the axis. Horizontal axis = GDP. GDP= C+I+G+X-M. G= government spending or purchases. So if G goes up, GDP goes up hence shifts to the right.
Investment Advice : National Savings Investment Account