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    Question

    When the expected future marginal product of capital increases, then the IS  curve   

    A shifts up and to the right Correct Answer Incorrect Answer
    B shifts down and to the left Correct Answer Incorrect Answer
    C becomes steeper Correct Answer Incorrect Answer
    D becomes flatter Correct Answer Incorrect Answer

    Solution

    This shift occurs because the increase in investment demand at each interest rate increases overall demand, moving the IS curve to the right.

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