The Effect on the IS Curve of a Reduction in Taxes

question 128

Multiple Choice

The effect on the IS curve of a reduction in taxes will be less the

• A)flatter is the LM curve.
• B)steeper is the LM curve.
• C)greater the extent of "crowding out."
• D)greater is the marginal propensity to save.

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Definitions:

Groundless Thinking

The process of making conclusions or decisions based on no evidence or rational basis.

Selective Observation

The process of focusing attention on certain aspects of the environment while ignoring others, often influenced by existing beliefs and biases.

Casual Observation

An informal method of gathering information or data without any structured procedure, often based on spontaneous or unplanned observation of events or behaviors.

Mystification

A process by which the true nature of a social situation or relation is obscured, making it difficult for those involved to understand it or challenge the status quo.