Suppose There Is a Simultaneous Tax Increase and Open Market

question 60

Multiple Choice

Suppose there is a simultaneous tax increase and open market purchase of bonds. Which of the following must occur as a result of this?

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

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Definitions:

Economic Matters

Issues or concerns related to the production, distribution, and consumption of goods and services.

Commercial Speech

Speech done on behalf of a company or individual for the intent of making a profit.

Economic Interests

The concerns or advantages that affect the financial state or wealth of an entity or individual.

Federalism

A system of government where power is divided between a central governing authority and constituent political units, like states or provinces.