Suppose Congress wishes to reduce the budget deficit by reducing government spending. Use the IS-LM model to illustrate graphically the impact of the reduction in government spending on output and interest rates. Be sure to label: i. the axes; ii. the curves; iii. the initial equilibrium values; iv. the direction the curves shift; and v. the terminal equilibrium values.
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Q103: An increase in the money supply:
A) increases
Q104: Suppose Congress passes legislation that reduces taxes.
Q105: If money demand is extremely sensitive to
Q106: A tax cut combined with tight money,
Q107: According to the IS-LM model, when the
Q109: Those economists who believe that fiscal policy
Q110: If consumption is given by C =
Q111: If the IS curve is given by
Q112: An increase in taxes lowers income:
A) and
Q113: An increase in government spending raises income:
A)
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