3. Show the effects of a tax cut in the IS-LM model. Be sure to show the underlying dynamics in the goods market. Assuming a MPC of .75, what is the magnitude of the shift in the IS curve?

MACROECONOMICS
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Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?
Section9.A: The Simple Algebra Of Income Determination And The Multiplier
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3. Show the effects of a tax cut in the IS-LM model. Be sure to show the underlying dynamics in the
goods market. Assuming a MPC of .75, what is the magnitude of the shift in the IS curve?
Transcribed Image Text:3. Show the effects of a tax cut in the IS-LM model. Be sure to show the underlying dynamics in the goods market. Assuming a MPC of .75, what is the magnitude of the shift in the IS curve?
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