Suppose policy makers decide to reduce taxes. This fiscal policy action will cause which of the following to occur?
A) The LM curve shifts and the economy moves along the IS curve.
B) The IS curve shifts and the economy moves along the LM curve.
C) Both the IS and LM curves shift.
D) Neither the IS nor the LM curve shifts.
E) Output will change causing a change in money demand and a shift of the LM curve.
B
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The theory of an OCA sets out benefits to be derived from increased trade. A comparison of the U.S. currency area with that of the Eurozone reveals that:
A) interstate and inter-region trade is roughly equal in both areas. B) interstate and inter-region trade in the United States is smaller as a percent of gross state product than the same figure for Europe. C) interstate and inter-region trade in the United States is much larger as a percent of gross state product than the same figure for Europe. D) trade comparisons are largely irrelevant to the success of a currency union.
If the exchange rate is 0.8 euro per dollar, one dollar is equal to 1.25 euros
Indicate whether the statement is true or false