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The IS curve represents the equilibrium in the goods market, showing all combinations of interest rates and output levels where investment equals savings. It is derived from the Keynesian framework, where total demand for goods equals total supply. The primary implication of the IS curve is that it captures the relationship between interest rates and output in determining goods market equilibrium. When interest rates are high, investment decreases, leading to lower aggregate demand and output; conversely, lower interest rates stimulate investment and raise output. Therefore, the _____ _____ _______ ______ ______ _____ ______.
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