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 would rise and the interest rate would fall.
B)income and the interest rate would rise.
C)income would rise but the effect on the interest rate is uncertain.
D)the interest rate would rise but the effect on income is uncertain.
E)the effects on both income and the interest rate are uncertain.

Question

Quizplus · Accepted Answer

Both a tax cut and an autonomous increase in investment demand would shift the IS curve to the right, leading to higher income and higher interest rates in the IS-LM model.

Within the IS-LM Curve Model,if the Government Cut Taxes at the Same