According to the Keynesian IS - LM model, what is the effect of the following on output, the real interest rate, employment, and the price level of an economy? Distinguish between effects in the short-run and in the long-run. Your answers in each column should be relative to the original long-run equilibrium levels of each variable. Increased tax incentives for investment (the tax breaks for investment are offset by lump - sum tax increases that keep total current tax collections unchanged). Short-run Long-run Output: Real Interest Rate: Employment: Price Level:

According to the Keynesian IS - LM model, what is the effect of the following on output, the real interest rate, employment, and the price level of an economy? Distinguish between effects in the short-run and in the long-run. Your answers in each column should be relative to the original long-run equilibrium levels of each variable. Increased tax incentives for investment (the tax breaks for investment are offset by lump - sum tax increases that keep total current tax collections unchanged). Short-run Long-run Output: Real Interest Rate: Employment: Price Level:

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter26: Monetary Policy

Section26.A: Policy Disputes Using The Self Correcting Aggregate Demand And Supply Model

Problem 6SQ

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