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Use the IS-LM Model to Answer This Question

question 12

Essay

Use the IS-LM model to answer this question.Suppose there is a simultaneous increase in taxes and reduction in the money supply.Explain what effect this particular policy mix will have on output and the interest rate.Based on your analysis,do we know with certainty what effect this policy mix will have on investment? Explain.


Definitions:

Punitive Damages

are monetary compensations awarded in a lawsuit as a punishment to the defendant and to deter future similar acts.

Fraud

A deliberate deception to secure unfair or unlawful gain, or to deprive a victim of a legal right.

Misrepresentation

The act of giving false or misleading information about a matter of fact, which may induce someone to enter into a contract or make a decision they otherwise might not have made.

Rescinds

To annul, rescind, or abolish a law, order, or agreement.

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