Which of the Following Will Occur in an IS-LM Model

question 13

Multiple Choice

Which of the following will occur in an IS-LM model, if the government decides to raise the income tax rate?

• A)the IS-curve will become flatter and shift to the right
• B)the IS-curve will become steeper and shift to the left
• C)the IS-curve will shift parallel to the left
• D)the LM-curve will become steeper and shift to the right
• E)the LM-curve will shift parallel to the right

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Definitions:

Common Stock

Common stock represents ownership shares in a corporation, entitling holders to vote on company matters and potentially receive dividends.

Retained Earnings

Retained earnings represent the portion of net earnings not paid out as dividends but retained by the company to be reinvested in its core business or to pay debt.

Income Statement

A financial statement that shows a company's revenues, expenses, and profits or losses over a particular period.

Rent Expense

The cost incurred for leasing a property or equipment used in the operation of a business.