Refer to Figure 3 Below

Multiple Choice

Refer to figure 3 below. Which statement about the two possible IS curves in figure 3 is true? Figure 3

A) The economy is in equilibrium where IS₁ and IS₂ intersect.
B) IS₁ represents an economy in which consumers' expenditure and investment spending are more sensitive to interest rate changes than they are in the economy represented by IS₂.
C) IS₁ represents an economy in which consumers' expenditure and investment spending are less sensitive to interest rate changes than they are in the economy represented by IS₂.
D) None of the above is true.