After the press conference that followed the Federal Open Market Committee meeting on June 19, 2013, there were reports in the media that Chairman Bernanke’s comments were a signal that the Fed would raise interest rates sooner than expected. As a result, the yield on 10-year U.S. Treasury notes rose to almost 2.6%, the highest level since August 2011.

a) Comment on how this would affect the IS curve.

b) Show your answer graphically.