An Increase in the Effective Tax Rate on Capital Would

question 31

Multiple Choice

An increase in the effective tax rate on capital would cause the IS curve to ________ and the LM curve to ________.

• A)shift down and to the left; be unchanged
• B)shift down and to the left; shift up and to the left
• C)shift up and to the right; be unchanged
• D)shift up and to the right; shift up and to the left

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Definitions:

Articles of Incorporation

A document filed with a state government to legally document the creation of a corporation.

Secretary of State

An official in many countries who is in charge of foreign affairs, or in some cases, domestic affairs and state administration.

Filed

Filed refers to the process of submitting a document officially to a court or government agency, making it part of the public record.

Watered Shares

Shares issued in exchange for property that has been overvalued. Also called watered stock. See also discount shares.