A Tax Increase That Affects Both Aggregate Demand and Potential

question 71

Multiple Choice

A tax increase that affects both aggregate demand and potential output is predicted to _____ the long-run equilibrium level of output, while inflation _____.

• A)decrease; increases
• B)increase; decreases
• C)decrease; may increase, decrease, or remain unchanged
• D)decrease; decrease

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Definitions:

Expected Expense

Expected expense is a forecasted cost anticipated to be incurred in the execution of a plan or operation.

Expected Revenue

The anticipated amount of money a business will receive from its operations, calculated by multiplying potential sales quantity by the selling price.

Expected Revenue

The anticipated income from the sale of goods or services, calculated by multiplying the expected sales volume by the unit price.

Standard Deviation

Standard deviation is a statistical measure that quantifies the variability or dispersion of a set of data points or distribution from its mean.