In the Basic Keynesian Model, a Tax Cut

question 126

Multiple Choice

In the basic Keynesian model, a tax cut:

• A)reduces short-run equilibrium output.
• B)increases short-run equilibrium output.
• C)reduces potential output.
• D)increases potential output.

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Definitions:

Strength

The quality or state of being physically strong, as well as a person's mental or emotional ability to deal with difficult situations.

Direction

Guidance or instructions on how to proceed; or, the course along which something moves.

Correlation Coefficient

A statistical measure that indicates the extent to which two variables fluctuate together, showing the strength and direction of their relationship.

Correlation Coefficient

A statistical measure that calculates the strength and direction of a linear relationship between two variables.