According to the Model Developed in Chapter 3, When Taxes

question 54

Multiple Choice

According to the model developed in Chapter 3, when taxes are increased but government spending is unchanged, interest rates:

• A) increase.
• B) are unchanged.
• C) decrease.
• D) can vary wildly.

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Definitions:

John Maynard Keynes

A British economist whose theories on government intervention in economies (Keynesian economics) have greatly influenced modern macroeconomic policies, particularly regarding the use of fiscal and monetary measures.

Karl Marx

A 19th-century philosopher, economist, and political theorist known for his critique of capitalism and the development of Marxist theory.

Milton Friedman

An influential American economist and Nobel laureate known for his strong belief in free-market capitalism and minimal government intervention.

Thorstein Veblen

An American economist and sociologist known for his theory of the leisure class and conspicuous consumption.