1. Using the information in this chapter, label each of the following statements as true, false, or uncertain. Explain in short. a. The main determinants of investment are the level of sales and the interest rate. NS. If all the exogenous variables in the IS relationship are held constant, a higher level of output can be achieved only by lowering the rate of interest. NS. The IS curve slopes downward because the market equilibrium for goods means that an increase in taxes leads to a decrease in the level of output. Dr.. If government spending and taxes increase by the same amount, the IS curve will not change. NS. The LM curve is upward sloping because a higher level of money supply is needed to increase output. F. Increase in government expenditure leads to decrease in investment. g. Government policy can increase production without changing the interest rate only if the monetary and fiscal policy variables change.