*On click event*

**Plotting the second point**

To derive the second point we assume that a decrease in the interest rate takes place from i_{2} to i_{1}. According to our investment
schedule the level of investment increases to I_{2}.

In the goods market the increase in investment
spending increases the demand for goods. The demand for goods curve
shifts upwards.
The shift in the demand for goods is equal to
the increase in investment (which is the result of a decrease in the interest rate).
At
the initial level of equilibrium income, an excess demand is created and the increase in investment has a multiplier effect on the level
of income and output. Eventually goods market equilibrium is achieved at point 2 with a corresponding level of equilibrium income of Y_{2}.

From the information in diagrams (a) and (b), namely
that at an interest rate of i_{1} a goods market equilibrium occurs at an
income level of Y_{2} the second point of our IS curve is
plotted. Note that point 2 in diagram (c) corresponds to point 2 in
diagram (b) and indicates a goods market equilibrium position.

By assuming different interest rates we can derive a number of
corresponding goods market equilibrium positions
which will eventually gives us the IS curve. We will take a short cut by
drawing a straight line through points 1 and 2. This then is our IS curve showing ** combinations of interest rates and income levels ** where the goods market equilibrium is in equilibrium, given that all autonomous variables are unchanged

Comparing point 1 with point 2 we see that at both points the goods market is in equilibrium, that is, where Z = Y. The demand for goods is however higher at point 2 than at point 1 due to the lower interest rate which causes an increase in investment spending as well as a higher consumption spending by households due to the higher level of income