Within the IS-LM curve model, if the government cut taxes at the same time that there was an autonomous increase in investment demand then a. income and the interest rate would rise. b. the interest rate would rise but the effect on income is uncertain. c. income would rise and the interest rate would fall. d. income would rise but the effect on the interest rate is uncertain.
Within the IS-LM curve model, if the government cut taxes at the same time that there was an autonomous increase in investment demand then a. income and the interest rate would rise. b. the interest rate would rise but the effect on income is uncertain. c. income would rise and the interest rate would fall. d. income would rise but the effect on the interest rate is uncertain.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Within the IS-LM curve model, if the government cut taxes at the same time that there was an autonomous increase in investment demand then
a.
income and the interest rate would rise.
b.
the interest rate would rise but the effect on income is uncertain.
c.
income would rise and the interest rate would fall.
d.
income would rise but the effect on the interest rate is uncertain.
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