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

question 76

Multiple Choice

Using the aggregate demand-aggregate supply model, predict what happens in the short run when the federal government lowers the capital gains tax to stimulate investment.

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

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Definitions:

Certainty Avoidance

A cognitive behavior aiming to prevent ambiguity and ensure clarity in communication or information processing.

Power Inequalities

Situations or relationships where there is an uneven distribution of power, authority, or resources among individuals or groups.

Coalition-Building Approach

A strategy for organizing a diverse group of stakeholders to pursue a common goal or address a common issue, emphasizing collaboration and partnership.

Conflict Resolution

The process of addressing disputes and disagreements between parties, aiming for a peaceful and mutually acceptable solution.