In an IS-LM Model, If the Government Decides to Cut

question 4

Multiple Choice

In an IS-LM model, if the government decides to cut welfare spending,

• A)the interest rate will decrease while personal saving will increase
• B)the interest rate and the level of consumption will both decrease
• C)the interest rate will decrease while income tax revenue will increase
• D)the federal budget deficit will decrease and the level of output will increase
• E)none of the above

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