Which of the Following Leads to a Downward Shift in the Short-

question 299

Multiple Choice

Which of the following leads to a downward shift in the short- run Phillips curve?

• A) The long- run Phillips curve shifts rightward.
• B) Unexpected inflation increases.
• C) People expect the unemployment rate to increase.
• D) People expected inflation to be 5 percent last year and now expect inflation to be 3 percent this year.

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Definitions:

Tax Base

The total amount of assets or income that can be taxed by a governing authority, forming the essential revenue source.

Progressive Income Tax

A tax system where the tax rate increases as the taxable amount increases, placing a higher tax burden on high-income earners.

Ability-to-Pay Principle

A tax principle suggesting that taxes should be levied according to an individual or entity's capacity to pay, generally implying that those with higher incomes should pay more tax.

Proportional Income Tax

A tax system where the tax rate remains constant regardless of the amount of income, thus taxing all income levels at the same percentage.