The is curve shifts to the left when a taxes increase

Info icon This preview shows pages 3–5. Sign up to view the full content.

View Full Document Right Arrow Icon
24) The IS curve shifts to the left when (a) taxes increase. (b) government spending increases. (c) the money supply increases. (d) all of the above occur. (e) both (a) and (b) of the above occur. Answer: A Question Status: Study Guide 25) A decline in taxes _____ consumer expenditure and shifts the _____ curve shifts to the _____. 26) A tax increase ______ disposable income, ______ consumption expenditure, and shifts the IS curve to the _____. 27) A tax cut ______ disposable income, ______ consumption expenditure, and shifts the IS curve to the _____.
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
866 Frederic S. Mishkin • Economics of Money, Banking, and Financial Markets, Seventh Edition 28) A tax cut (a) increases consumption expenditure by reducing disposable income, thereby shifting the IS curve to the right. (b) increases consumption expenditure by increasing disposable income, thereby shifting the LM curve to the right. (c) increases consumption expenditure by increasing disposable income, thereby shifting the IS curve to the right. (d) decreases consumption expenditure by reducing disposable income, thereby shifting the LM curve to the right. (e) decreases consumption expenditure by reducing disposable income, thereby shifting the IS curve to the left. Answer: C Question Status: New 29) A tax increase shifts the IS curve to the 30) In 1981, Congress and President Reagan passed legislation cutting taxes and increasing federal expenditures. This policy shifted the ____ curve to the _____ . 31) If American college students decide that drinking Mexican-brewed beer helps one get noticed, net exports will tend to fall causing the _____ curve to shift to the left and aggregate demand to _____. Chapter 24 Monetary and Fiscal Policy in the ISLM Model 867
Image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern