Using the Keynesian Model,the Effect of an Increase in the Effective

question 40

Multiple Choice

Using the Keynesian model,the effect of an increase in the effective tax rate on capital would be to cause ________ in the real interest rate and ________ in output in the short run.

• A)a decrease; a decrease
• B)a decrease; no change
• C)an increase; an increase
• D)no change; a decrease

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Definitions:

Elasticity of Supply

Elasticity of supply measures the responsiveness of the quantity supplied of a good or service to a change in its price.

Shifting Resources

The reallocation of resources from one use to another, often in response to changing economic conditions or priorities.

Software Upgrade

The process of replacing a software version with a newer, often more improved or secure version.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded by consumers.