In the short$-$run $IS-LM$ model with income taxation, taxes are given by $T\frac{?}{b}=ar(T)+tY.$ Suppose that $MPC=0\mathrm{.}75$ and the marginal tax rate $t=0\mathrm{.}2.$ Then, when $\frac{?}{\text{b}\text{a}\text{r}}(T)$ decreases by $100,$ then for any given interest rate, the $IS$ curve shifts horizontally

A$)$ to the left by $100.$

B$)$ to the right by $187\mathrm{.}50.$

C$)$ to the right by $375\mathrm{.}25$

D$)$ to the left by $350$

Consider the following short$-$run $IS-LM$ model with income taxation. The economy is described by equations $(1)$ through $(6)$: $($I$)C=335+0\mathrm{.}8(Y-T)$; $(2)I=500-50r$; $(3)G=346$; $(4)T=120+0.$I,$Y$; $(5)Y=C+I+G$; $(6)\frac{?}{\text{b}\text{a}\text{r}}\frac{M}{\frac{?}{?}}$bar $(P)=1\mathrm{.}5Y_{-}-60r$ where the nominal moncy supply $M=3000$ and the price level is $\frac{?}{\text{b}\text{a}\text{r}}(P)=1.($There are $10\%$ income taxes in this model$).$

Then, in the short run, the equilibrium output for the economy is given by $($approximately$)$:

A$)Y^{**}=2908\mathrm{.}32$

B$)Y^{**}=2343\mathrm{.}7$

C$)Y^{**}=3012\mathrm{.}8$

D$)Y^{**}=1925\mathrm{.}67$

Consider the following short$-$run $IS-LM$ model with income taxation. The economy is described by equations $(1)$ through $(6)$: $($I$)C=335+0\mathrm{.}8(Y-T)$; $(2)I=500-50r$;$(3)G=346$; $(4)T=120+0.IY$; $(5)Y=C+I+G$; $(6)\frac{?}{\text{b}\text{a}\text{r}}\frac{M}{\frac{?}{?}}$bar $(P)=1\mathrm{.}5Y-60r$ where the nominal money supply $\frac{?}{\text{b}\text{a}\text{r}}(M)=3000$ and the price level is $\frac{?}{\text{b}\text{a}\text{r}}(P)=1.($There are $10\%$ income taxes in this model$).$

Then, in the short run, the equilibrium interest rate is given by $($approximately$)$:

A$)r^{**}=7\mathrm{.}35$

B$)r^{**}=11\mathrm{.}08$

C$)r^{**}=8\mathrm{.}57$

D$)r^{**}=15\mathrm{.}24$

Consider the following short$-$run $IS-LM$ model with income taxation. The economy is described by equations $(1)$ through $(6)$: $($I$)C=335+0\mathrm{.}8(Y-T)$; $(2)I=500-50r$; $(3)G=346$; $(4)T=120+0.IY$; $(5)Y=C+I+G$; $(6)\frac{?}{\text{b}\text{a}\text{r}}\frac{M}{\frac{?}{?}}$bar $(P)=1\mathrm{.}5Y-60r$ where the nominal money supply $\frac{?}{\text{b}\text{a}\text{r}}(M)=3000$ and the price level is $\frac{?}{\text{b}\text{a}\text{r}}(P)=1.($There are $10\%$ income taxes in this model$).$

Suppose that the business confidence index falls so that now $\frac{?}{\text{b}\text{a}\text{r}}(I)=400.$ That is$,\frac{?}{\text{b}\text{a}\text{r}}(I)$ decreases by $100$ units. Suppose that the Central Bank wants to maintain output constant $($at the level you found in Question $14),$ by how much must the money supply change $($approximately$)?$

A$)$ The money supply must decrease by $215$ units.

B$)$ The money supply must increase by $121$ units

C$)$ The money supply must decrease by $367$ units

D$)$ The money supply must increase by $305$ units.

Consider the following short$-$run $IS-LM$ model with income taxation. The economy is described by equations $(1)$ through $(6)$: $($l$)C=335+0\mathrm{.}8(Y-T)$; $(2)I=500-50r$; $(3)G=346$; $(4)T=120+0.IY$; $(5)Y=C+I+G$; $(6)\frac{?}{\text{b}\text{a}\text{r}}\frac{M}{\frac{?}{?}}$bar $(P)=1\mathrm{.}5Y-60r$ where the nominal money supply $\frac{?}{\text{b}\text{a}\text{r}}(M)=3000$ and the price level is $\frac{?}{\text{b}\text{a}\text{r}}(P)=1.($There are $10\%$ income taxes in this model$).$

Suppose that the business confidence index falls so that now $I=400.$ That is$,$ I decreases by $100$ units. Suppose that the Central Bank wants to maintain the interest rate constant $($at the level you found in Question $15),$ by how much must the money supply change $($approximately$)?$

Hint: First find the new output level.

A$)$ The money supply must decrease by $215$ units.

B$)$ The money supply must increase by $121$ units

C$)$ The money supply must decrease by $533$ units

D$)$ The money supply must increase by $405$ units.

Reference $($Q$18-$Q$21)$: Chapter $13$

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