Answer to Question #179323 in Macroeconomics for Amo

Question #179323

Use the Keynesian-cross diagram of desired demand and output to illustrate and explain the impact on the IS curve of a rise in taxes


1
Expert's answer
2021-04-09T06:51:36-0400


A rise in taxes will shift the IS curve inwards from IS1 to IS2. This is because increase of taxes decreases consumption leading to a decrease in output.


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