Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter8: Aggregate Demand And Aggregate Supply
Section8.2: Aggregate Demand
Problem 3ST: The money supply has risen, but total spending has declined. Is this state of affairs possible?...
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Question
If the government increases the income tax rate (t) and the central bank responds by increasing the supply of money, how will investment (I), saving (S) and money demand (md) be affected? Explain your answer with the help of an IS-LM diagram.
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