Use the IS-LM model to answer this question. Suppose there is a simultaneous increase in taxes and reduction in the money supply. Explain what effect this particular policy mix will have on output and the interest rate. Based on your analysis, do we know with certainty what effect this policy mix will have on investment? Explain
What will be an ideal response?
In this case, the LM curve shifts up and the IS curve shifts to the left. In this case, output will clearly fall. What happens to the interest rate depends on the relative magnitude of the two policies. The effects on I are again ambiguous.
Economics
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If the marginal social cost of a good is $70 and the marginal external cost is $20, what does the marginal private cost equal?
What will be an ideal response?
Economics
The largest component of government spending is for interest on the national debt
Indicate whether the statement is true or false
Economics