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Question29 When the multiplier is included in the IS curve, a change in taxes has no impact on short-run output. demand shock has a larger impact on short-run fluctuations than with the standard IS curve. change in the real interest rate has a smaller impact on short-run fluctuations than with the standard IS curve. demand shock has a smaller impact on short-run fluctuations than with the standard IS curve. change in the marginal product of capital has a smaller effect on short-run fluctuations in output than with the standard IS curve. ResetMaximum marks: 1 Flag question undefined
Options
A.change in taxes has no impact on short-run output.
B.demand shock has a larger impact on short-run fluctuations than with the standard IS curve.
C.change in the real interest rate has a smaller impact on short-run fluctuations than with the standard IS curve.
D.demand shock has a smaller impact on short-run fluctuations than with the standard IS curve.
E.change in the marginal product of capital has a smaller effect on short-run fluctuations in output than with the standard IS curve.
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Step-by-Step Analysis
The question asks about the effects on short-run output when the IS curve includes the multiplier, comparing various scenarios to the standard IS curve.
Option 1: 'change in taxes has no impact on short-run output.' This is unlikely correct because tax changes typically shift the IS curve and affect aggregate demand, especially when the multiplier is present. Therefore, taxes still influence short-run output, not none.
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