A decrease in the effective tax rate on capital would

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10. A decrease in the effective tax rate on capital would cause the IS curve to (a) shift up and to the right. (b) shift down and to the left. (c) remain unchanged. (d) remain unchanged if taxes are fully deductible from income; otherwise, shift up and to the right. Answer: A Level of difficulty: 1 Section: 9.2 11. An increase in labor supply would cause the IS curve to 12. A temporary decline in productivity would cause the IS curve to 13. A decrease in wealth would cause the IS curve to 14. An increase in the expected future marginal product of capital would cause the IS curve to (a) shift up and to the right. (b) shift down and to the left. (c) remain unchanged. (d) remain unchanged if firms face borrowing constraints; otherwise, shift down and to the left. Answer: A Level of difficulty: 1 Section: 9.2
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Chapter 9 The IS-LM/AD-AS Model: A General Framework for Macroeconomic Analysis 135 15. The IS curve would unambiguously shift up and to the right if there were 16. A rise in the price of a bond causes the yield of the bond to 17. A decline in the price of a bond causes the yield of the bond to
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