Assume That the Short- Run AS Is Upward Sloping

question 134

Multiple Choice

Assume that the short- run AS is upward sloping. If the government chooses to reduce government expenditure or to increase taxes, according to the Aggregate Supply - Aggregate Demand model:

• A) the price level will rise and GDP will decrease.
• B) the price level will fall and GDP will increase.
• C) the price level will fall and GDP will decrease.
• D) the price level will rise and GDP will increase.

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Definitions:

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