In the IS-LM Model When Taxation Increases, in Short-Run Equilibrium

question 2

Multiple Choice

In the IS-LM model when taxation increases, in short-run equilibrium, in the usual case, the interest rate
And output .

• A)rises; falls
• B)rises; rises
• C)falls; rises
• D)falls; falls

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Definitions:

Treaty of Paris

A significant agreement signed in 1783 that ended the American Revolutionary War, acknowledging American independence from Britain.

Battle of Waterloo

The decisive battle fought on June 18, 1815, near the town of Waterloo in present-day Belgium, where Napoleon Bonaparte was defeated by the British led by the Duke of Wellington and the Prussians under Gebhard Leberecht von Blücher.