Assuming a Long-Run Aggregate Supply Curve, a Decrease in Taxes

question 107

Multiple Choice

Assuming a long-run aggregate supply curve, a decrease in taxes results in _______ in output and _______ in prices.

• A)a decrease; a decrease
• B)no change; an increase
• C)no change; a decrease
• D)an increase; no change

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Definitions:

Compounded Quarterly

This refers to the process of applying interest to an initial amount of money (principal) four times a year, at the end of each quarter.

Economically Equivalent

Refers to different financial transactions or investments that have the same economic effect or value, despite differing in structure or form.

Scheduled Payment

A pre-determined amount of money that is paid at regular intervals under the terms of a loan or lease agreement.

Compounded Semi-Annually

Interest on a loan or investment calculated twice a year, adding each interest payment to the principal.