Suppose There Is a Simultaneous Tax Decrease and Open Market

question 71

Multiple Choice

Suppose there is a simultaneous tax decrease and open market sale of bonds. Which of the following must occur as a result of this policy mix?

• A) Output increases.
• B) The interest rate decreases.
• C) Output decreases.
• D) The interest rate increases.
• E) Both output and the interest rate decrease.

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Definitions:

Alcoholic Beverages

Drinks containing ethanol, commonly known as alcohol, regulated by law in many parts of the world.

Tenancy at Will

A rental agreement allowing the tenant to occupy the property without a fixed term, terminable by either party at any time.

Estate at Sufferance

A situation where a tenant continues to occupy property after the lease term has ended, without the landlord's permission.

Leases Property

A contractual arrangement where a lessor (owner) grants a lessee (tenant) the right to use property for a specified period in exchange for rent or other considerations.