Name LTIPLE CHOICE. Choose the one alternative that best completes the statement
ID: 1125444 • Letter: N
Question
Name LTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the consumption expenditure, and shifts the IS 1) A tax increase curve to the disposable income, , everything else held constant. A) increases; increases; right C) decreases; decreases; left B) decreases; increases; left D) increases; decreases; left 2) Which of the following does NOT shift the IS curve? A) a fall in the interest rate C) a decline in government spending B) an increase in autonomous consumption D) an increase in government spending 3) A decrease in autonomous consumer expenditure causes the equilibrium level of aggregate output to at any given interest rate and shifts the everything else held constant. curve to the A) rise; IS; right B) rise; LM; right C) fall; IS; left D) fall; LM; left ) The describes points for which the goods market is in equilibrium.Explanation / Answer
1) A tax increase "Decreases" the disposable income, "Decreases" the consumption and shifts the IS curve to the "left". An increase in taxes reduces the income and hence it decreases the consumption and any decrease in consumption will shift the IS curve to the left.
2) "A fall in the interest rate" any fall in the interest rates will affect the money supply and it will affect the LM curve. iT will shift the LM curve to its right.
3) A decrease in autonomous will "decrease" the output level or aggregate demand curve and this will cause the "IS" curve to shift to its "Left". The correct answer is "C".
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