Starting from Short-Run Equilibrium,the Following Occurs: Personal Income Taxes Are

question 61

Multiple Choice

Starting from short-run equilibrium,the following occurs: personal income taxes are cut,business taxes are cut,and labor productivity rises.What is the effect on the price level and Real GDP in the short run?

• A) Real GDP rises and the price level necessarily falls.
• B) Real GDP rises and the price level necessarily rises.
• C) Real GDP falls and the price level necessarily remains the same.
• D) Real GDP rises and the effect on the price level cannot be determined.
• E) Real GDP rises and the price level necessarily remains the same.

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Definitions:

Federal Assistance

Financial or material support provided by the federal government to individuals, organizations, or state and local governments.

Commercial Farming

The practice of farming with the intent to produce crops and livestock for sale in the market, often involving large-scale operations.

Knights Of Labor

A significant labor organization in the late 19th century in the United States that aimed to promote workers' rights and social reforms.