# IS Curve - the influence of interest rates

Using the same simple model of the economy, now allow for the impact of interest rates on consumption.

The consumption function is:

Y=120+0.7Y-10r

where r is the level of interest rates.

Calculate the equilibrium level of income when interest rates are 1, 2, 3, 4, 5, 6, 7, 8, 9 and 10% Draw the resulting IS curve.

https://brainmass.com/economics/general-equilibrium/curve-influence-interest-rates-366090

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Using the same simple model of the economy, now allow for the impact of interest rates on consumption.

The ...

#### Solution Summary

The solution shows how to calculate the equilibrium level of income with interest rates and resulting IS curve.

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