How can you reconcile the president statement with economic

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Q. ) In explaining the 2003 bill to cut taxes, President Bush is quoted as saying, "When people have more funds, they can spend it on goods also services."

a. In the IS-LM model, will a tax cut change the funds provide in the economy? Does a change in the funds provide shift the IS or the LM curve?

b. In the IS-LM model, does a tax cut shift the IS or the LM curve?

c. Based on your answers in a also b, how can you reconcile the president's statement with economics? Can you suggest how his statement could be modified to be consistent with the IS-LM model?

Reference no: EM1344086

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