If a Tax Cut Increases Aggregate Demand More Than Aggregate

question 44

Multiple Choice

If a tax cut increases aggregate demand more than aggregate supply, real GDP ________ and the price level ________.

• A) increases; does not change
• B) decreases; rises
• C) increases; rises
• D) decreases; falls
• E) increases; falls

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Definitions:

Specifications

Detailed descriptions of the design, materials, and performance requirements for products or services.

Reliability

The quality of being dependable or reliable; in products, it refers to the likelihood of them performing consistently over their expected lifecycle.

Mathematical Probability

The quantitative measurement of the likelihood of a certain event occurring, based on mathematical calculations.

Stipulated Time

A specified or agreed-upon period in which something is to be done or accomplished.