Question
Consider a variant of the IS-LM model studied in class, where Investment, I=I0+b1*Y-b2*r, and the demand for money, L(r,Y)=m0+k*Y-h*r. We know with certainty that a
Consider a variant of the IS-LM model studied in class, where Investment, I=I0+b1*Y-b2*r, and
the demand for money, L(r,Y)=m0+k*Y-h*r. We know with certainty that a tax increase must
cause which of the following?
Group of answer choices
a decrease in the interest rate and an increase in investment
no change in output if the Fed simultaneously pursues expansionary monetary policy
a decrease in the interest rate and an ambiguous effect on investment
an increase in the interest rate and an upward shift in the LM curve
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Dynamic Business Law
Authors: Nancy Kubasek
1st Edition
0073524913, 9780073524917
