Consider a short-run IS-LM model where MPC =0.75. Suppose that taxes are initially given by T=1500. Suppose also that MPC = 0.75. Then, if decreases by 1000, then for any given interest rate, the IS curve shifts: O to the right by 1000. Oto the right by 4000. to the left by 1000. to the right by 3000.

Consider a short-run IS-LM model where MPC =0.75. Suppose that taxes are initially given by T=1500. Suppose also that MPC = 0.75. Then, if decreases by 1000, then for any given interest rate, the IS curve shifts: O to the right by 1000. Oto the right by 4000. to the left by 1000. to the right by 3000.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter8: Aggregate Demand And The Powerful Consumer

Section: Chapter Questions

Problem 8DQ

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