At the beginning of the Reagan presidency, the President proposed a substantial tax cut and suggested that this policy would attack the very high levels of inflation. From the point of view of the ISLM model, this policy seemed:

well-advised because a tax cut pushes the IS curve to the left, which reduces inflationary pressures.
well-advised because a tax cut pushes the LM curve to the left, which reduces inflationary pressures.
poorly-advised because a tax cut pushes the IS curve to the right, which increases inflationary pressures.
poorly-advised because a tax cut pushes the LM curve to the right, which increases inflationary pressures.


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