Question: 3. Consider the standard version of the IS-LM model presented in class given by, IS curve: Y = co+ c(Y - T)+ I(r)+G, LM curve:

3. Consider the standard version of the IS-LM model presented in

3. Consider the standard version of the IS-LM model presented in class given by, IS curve: Y = co+ c(Y - T)+ I(r)+G, LM curve: M/ P = (Y - T) L(r + me). a) Evaluate graphically the effects of a tax cut. Briefly discuss the process of adjustment. b) Derive analytically the effect of the tax cut on output

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