Comparing the simple Keynesian model with the IS-LM model,in the IS-LM model
A)the government spending multiplier is larger.
B)the balanced budget multiplier is larger.
C)the tax multiplier is smaller.
D)there is no difference between any of the multipliers.

Question

Quizplus · Accepted Answer

In the IS-LM model, the tax multiplier is smaller because it incorporates the interaction between the goods market and the money market, which dampens the effect of tax changes on aggregate demand compared to the simple Keynesian model where only the goods market is considered.

Comparing the Simple Keynesian Model with the IS-LM Model,in the IS-LM