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What happens to the IS and LM curves in the short-run when the government increases taxes?

LM curve: Nothing happens to the LM curve, because the LM curve deals with the financial market. The LM relation is M/P = YL(i). As you can see, taxes is not included in the LM relation. IS curve: The IS ...

Answered by Ilse V. • Economics tutor

6520 Views

Explain two causes of inflation using AD/AS analysis.

Two causes of inflation include an increase in the price of oil and a depreciation of the pound. An increase in the price of oil will cause the costs of production for producers to rise, such as when fuel...

Answered by Heywood N. • Economics tutor

2645 Views

State and explain two ways in which domestic fuel consumption gives rise to negative externalities.

Emissions from power stations cause healthcare costs to local residents.2) Pollutants cause increasing health costs which the taxpayer has to meet(A negative externality is a spillover cost affectin...

Answered by Arthur E. • Economics tutor

3669 Views

Explain the effects of increased Tariffs on goods from the UK

There are many effects of tariffs. In an A- level exam a student would be expected to make a several points, with several chains of reasoning, with an evaluation, ending with a conclusion. An Example of o...

Answered by Tom C. • Economics tutor

2140 Views

What impact would a cut in the base rate by the Bank of England have on Aggregate Demand?

The components of Aggregate Demand are: Consumption, Investment, Government Spending and Net Exports. A cut in the base rate would mean that Aggregate Demand will increase, shifting outwards. A reduction ...

Answered by Georgie K. • Economics tutor

1413 Views