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A Decrease in Taxes Causes the IS Curve to Shift

question 24

Multiple Choice

A decrease in taxes causes the IS curve to shift ________ and the aggregate demand curve to shift ________.


Definitions:

Marginal Product

The additional output that results from using one more unit of a particular input, while holding other inputs constant.

Average Product

The output produced per unit of input, calculated by dividing total output by the number of units of a specific input.

Marginal Product

The boost in output stemming from an increment in input by one unit.

Wage

The payment received by workers for their labor, typically expressed as an amount per hour or per year.

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