In the long-run ISLM model, the long-run effect of a tax cut is to | Faculties

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Shiva Ram

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📊 Macroeconomics Theories and Policies 1

Q. In the long-run ISLM model, the long-run effect of a tax cut is to

(A) increase real output and the interest rate.
(B) increase real output and not affect the interest rate.
(C) not affect real output and increase the interest rate.
(D) not affect real output and reduce the interest rate.

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✅ Correct Answer: (C) not affect real output and increase the interest rate.

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