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.
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Which of the following statements is correct?
a. It is monetary policy and not tax policy that influences interest rates. b. Tax reductions play little role in influencing output. c. Marginal tax rates today are lower than they have ever been in U.S. history. d. Budget deficits show little correlation with interest rates. e. None of the above.
A bureaucrat at a public utility commission hearing testifies that the local area telephone monopoly is able to maximize its revenue. For that reason the rate-hike request should be denied
What will be an ideal response?
Economists consider the economy to be at "full employment" when there is no cyclical unemployment.
Answer the following statement true (T) or false (F)
The principal argument against comparable worth is that the demand and supply of labor in the labor market allocates workers to where they are needed the most
a. True b. False Indicate whether the statement is true or false