When a Government Reduces Its Deficits by Increasing Taxes,in the Medium

question 30

Multiple Choice

When a government reduces its deficits by increasing taxes,in the medium run,

• A)output returns to potential.
• B)output increases.
• C)interest rate is higher.
• D)IS curve shifts inward to the left.

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Definitions:

Chesapeake Labor Force

Historically refers to the workforce in the Chesapeake Bay area, notably including both free and enslaved laborers, primarily in agricultural settings.

Eighteenth Century

A term referring to the period from 1701 through 1800 in the Gregorian calendar, marked by significant developments in various fields such as science, politics, and philosophy.

Emigration

The act of leaving one's country or region to settle in another.

Cash Crop

Agricultural crops grown primarily for sale to return a profit, such as cotton, tobacco, and sugar, rather than for personal use by the farmers.