Table 7-1 Table 7-1 Shows the Aggregate Demand and Short-Run

question 156

Multiple Choice

Table 7-1
Table 7-1 shows the aggregate demand and short-run aggregate supply curves for an economy. The potential level of output is $7.6 trillion.
-Refer to Table 7-1. What is the initial real GDP and price level?

• A) Real GDP = 7.6 trillion; price level = 1.2
• B) Real GDP = 7.6 trillion; price level = 2.8
• C) Real GDP = 6.8 trillion; price level = 2.0
• D) Real GDP = 7.8 trillion; price level = 1.0

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Definitions:

Horizontal Equity

A principle in taxation that asserts that individuals with the same income or resources should pay the same amount in taxes.

Vertical Equity

A principle in tax policy that states taxpayers with a greater ability to pay should contribute more in taxes.

Small Economy

Refers to an economy with a relatively limited size in terms of population, output, and market activity, often more susceptible to external economic influences.

Horizontal Equity

A principle in taxation and welfare distribution that posits individuals with similar income or ability to pay should be treated equally.