Explain: (1) What Happens to Income, Money Demand, the Interest

question 40

Essay

Explain: (1) what happens to income, money demand, the interest rate, and output when an increase in tax is implemented and (2) what happens to the position of the LM curve as a result of the fiscal contraction.

---

Definitions:

Advertising

The process or job of creating content to advertise the sale of business goods or services.

Feedback Loop

A process in which the outputs of a system are circled back and used as inputs, often for the purpose of enhancing operations or improving future performance.

Communication Process

The communication process is the sequence of steps whereby a message is transmitted from a sender to a receiver, involving encoding, media choice, decoding, and feedback.

Decoded

The process of translating encoded data or messages into a comprehensible format, making the information accessible and understandable.