Suppose individuals now believe that there will be a future tax cut. This reduction in expected future taxes will cause which of the following to occur in the current period?
A) the LM curve to shift down
B) the LM curve to shift up
C) the IS curve to shift rightward
D) the IS curve to shift leftward
E) none of the above
C
You might also like to view...
An actor that is committed to making loans to stressed economic actors when market institutions would refuse to do so is called
a. a lender of last resort. b. a hegemon banker. c. an institutional lender. d. a fundamental banker.
In the textbook model, wealth is held in two forms: money and in bond funds. Which of the following statements are true?
I. Money and bond funds earn the same interest rates in a well functioning money market. II. Money is a more liquid asset compared to bond funds. III. Bond funds are interest earning assets while money generally is not. IV. The difference between the interest rates paid on money deposits and the interest return available from bonds is the cost of holding money. A) I, II, and IV B) I and IV C) II, III, and IV D) III and IV