When Drawn Against the Real Interest Rate, the Output Demand

question 32

Multiple Choice

When drawn against the real interest rate, the output demand curve unambiguously shifts to the right if either or both of the following occur.

• A)a decrease in current taxes and a decrease in future taxes
• B)an increase in current taxes and a reduction in interest rates
• C)an increase in current taxes and an increase in future taxes
• D)a decrease in current taxes and an increase in future taxes
• E)an increase in current taxes and a decrease in future taxes

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Definitions:

Mental Representations

Internal cognitive symbols that represent external reality, which are used in the process of thinking and understanding the world.

Violation-of-Expectation

A method used in developmental psychology research to study infants' understanding of physical and social world by evaluating their reactions to surprising or unexpected events.

Stimulus

Something that causes a response in an organism, sensory system, or psychological process.

Physical Laws

The fundamental principles that describe the forces and properties of nature, governing the behavior of the physical universe.