An Increase in Taxes Lowers Income

question 28

Multiple Choice

An increase in taxes lowers income:

• A)and the interest rate in the short run but leaves both unchanged in the long run.
• B)in the short run but leaves it unchanged in the long run, while increasing consumption and lowering investment.
• C)in the short run but leaves it unchanged in the long run, while lowering consumption and increasing investment.
• D)and the interest rate in both the short run and in the long run.

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Definitions:

Reasonable Diligence

The level of care or effort that is expected from an individual in a particular situation, which is considered to be sensible and appropriate.

Remedial Measures

Actions taken to correct or address a problem, often implemented to provide a solution or improvement.

Absolute Immunity

A form of legal protection preventing an individual from being sued for their actions, typically granted to certain public officials during their official duties.

Ethics Codes

Written guidelines issued by organizations to their members to help them conduct their actions in accordance with its primary values and ethical standards.