In an AD-AS Diagram with an Upward-Sloping AS-Curve, If a Tax

question 42

Multiple Choice

In an AD-AS diagram with an upward-sloping AS-curve, if a tax decrease is combined with money expansion,

• A)output will remain relatively unaffected but interest rates will decrease
• B)output will remain relatively unaffected but interest rates will definitely increase
• C)aggregate demand, the price level, and output will all decrease
• D)aggregate demand, the price level, and output will all increase
• E)the price level will increase but we can't say what will happen to output or interest rates

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