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Unformatted text preview: the money lost from the tax cut. The action can also reduce a surplus. 7. The IS curve is a schedule that identifies the combinations of income and the interest rate at which the commodity market is in equilibrium. Everywhere along the IS curve the demand equals the supply. Anything that shifts the autonomous spending demand schedule will shift the IS curve in the same direction. 8. a. The IS curve will shift to the left if there is a decline in sales of agriculture to foreign countries because it is a decrease in net exports. b. The IS curve will shift to the left if there is a decline in the consumer confidence because demand will decrease. c. The IS curve will shift to the right because there is in increase in spending and therefore demand. d. The IS curve will shift to the left because of a decline in business confidence which will reduce demand. 10....
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This note was uploaded on 03/01/2009 for the course ECON 101 taught by Professor Dumbass during the Winter '08 term at UCSB.
- Winter '08