Using the Aggregate Demand-Aggregate Supply Model, Predict What Happens in the Short

question 142

Multiple Choice

Using the aggregate demand-aggregate supply model, predict what happens in the short run when the federal government enacts a cut in the personal income tax rates.

• A) The aggregate supply curve shifts right; the aggregate demand curve is not affected; price level decreases; real GDP increases.
• B) The aggregate supply curve shifts left; the aggregate demand curve is not affected; price level increases; real GDP decreases.
• C) The aggregate demand curve shifts right; the aggregate supply curve is not affected; price level and real GDP increase.
• D) The aggregate demand curve shifts left; the aggregate supply curve is not affected; price level and real GDP decrease.

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Definitions:

Binomial Problem

A statistical question or experiment that has exactly two possible outcomes, 'success' or 'failure', and where the probability of success is the same each time the experiment is conducted.

Standard Deviation

Standard deviation is a measure of the amount of variation or dispersion in a set of values, indicating how much the values in a dataset deviate from the mean.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how much the values in a data set vary from the mean.

National Rifle Association

An American nonprofit organization that advocates for gun rights.