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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