我正好读到IS Curve这块,但是有一点无法理解,还请各位前辈指点下
书本上说到decrease in the real interest rate will increase the real aggregate income. There must be an inverse relationship between the real interest rate and income.
However, based on my understanding, when interest goes higher, it will increase investment and savings which will cause people's income higher. On the opposit, when interest goes lower, it will reduce people's motivation to save and invest, which will cause less income.
Please kindly provide me an example with explaination.
Thanks very much.