If Government Spending and Taxes Increase by the Same Amount

question 34

Multiple Choice

If government spending and taxes increase by the same amount,

• A)the IS curve does not shift
• B)the IS curve shift leftward
• C)the IS curve shifts rightward
• D)the LM curve shifts downward

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Definitions:

Marginal Cost

The supplementary expenditure incurred by making one more unit of a product or service.

Relevant Resources

Resources that are directly applicable to the current economic, educational, or social context or need.

Industry Expands

This refers to the growth in the production capacity and output of various sectors in an economy, often due to increased demand or technological advancements.

Long-Run Supply Curve

A graphical representation showing the quantities of a good a firm is willing to supply at different prices over a period when all input levels can be varied.