Multiple Choice
We know with certainty that an increase in tax must cause which of the following?
A) A decrease in the interest rate and an ambiguous effect on investment.
B) No change in output if the central bank simultaneously pursues a contractionary monetary policy.
C) A decrease in the interest rate and an upward shift in the LM curve.
D) A decrease in the interest rate and an increase in investment.
E) A decrease in the interest rate and a decrease in investment.
Correct Answer:
Verified
Correct Answer:
Verified
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