Problem based on the is-lm model

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Assignment:

In all parts, assume that net taxes (T) are not a function of output (Y).

A. Based on the IS-LM model, when will the rise in government spending (G) surely lead to an increase in consumption (C)? Explain. Your answer should be backed by accurate graphs.

B. Based on the IS-LM model, when will the rise in government spending (G) surely lead to a decrease in consumption (C)? Explain. Your answer should be backed by accurate graphs.

C. Based on the IS-LM model, when will the rise in government spending (G) surely leave consumption (C) unchanged? Explain. Your answer should be hacked by accurate graphs.

D. If the government increases spending (G) and net taxes (T) by the same amount, output (Y) will not change. TruefFalse'? Explain using the right equation(s).

Reference no: EM133255630

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