When the Multiplier Is Included in the IS Curve

question 63

Multiple Choice

When the multiplier is included in the IS curve,

• A)a demand shock has a larger impact on short-run fluctuations than with the standard IS curve.
• B)it has no impact on potential output.
• C)a demand shock has a smaller impact on short-run fluctuations than with the standard IS curve.
• D)a change in taxes has no impact on short-run output.
• E)a and b are correct.

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