A tax increase shifts the IS curve to the | Faculties

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📊 Macroeconomics Theories and Policies 1

Q. A tax increase shifts the IS curve to the

(A) left, causing output and interest rates to fall.
(B) left, causing output and interest rates to increase.
(C) right, causing output and interest rates to fall.
(D) right, causing output and interest rates to rise.

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✅ Correct Answer: (A) left, causing output and interest rates to fall.

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