Which School of Thought Believes That Real GDP Always Equals

question 406

Multiple Choice

Which school of thought believes that real GDP always equals potential GDP?

• A) only classical
• B) only Keynesian
• C) Monetarist
• D) both Keynesian and classical

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Definitions:

Progressive

A tax system where the tax rate increases as the taxable amount increases, making it more burdensome for higher earners.

Excess Burden

The excess burden of a tax is the cost to society in economic welfare that exceeds the revenue raised by the government, often due to distorted market behaviors.

Perfectly Inelastic

A market condition where demand or supply does not change in response to price changes, represented by a vertical line on a graph.

Tax

A financial charge or other levy imposed upon a taxpayer by a governmental organization in order to fund various public expenditures.