In the standard IS-LM model which of the following is true, if the government raises tax rate and the central bank decides to hold money supply constant?
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UoH 2013 Question 78: IS-LM model
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IS-LM model has come up 137 times in 7 exams since 2004.
What this question tests
This question is on Fiscal policy and crowding out in IS-LM, part of IS-LM model in Macroeconomics.
How government spending and taxes move income and the interest rate, and how much private spending is displaced.
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