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When the Multiplier Is Included in the IS Curve

Question 60

Multiple Choice

When the multiplier is included in the IS curve:


A) a demand shock has a larger impact on short-run fluctuations than with the standard IS curve
B) it has no impact on potential output
C) a demand shock has a smaller impact on short-run fluctuations than with the standard IS curve
D) a change in taxes has no impact on short-run output
E) None of these answers are correct.

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