In the Medium Run,a Tax Increase That Causes a Reduction

question 37

Multiple Choice

In the medium run,a tax increase that causes a reduction in the budget deficit will

• A)affect only the price level.
• B)not affect the price level but will alter the composition of output.
• C)not affect the level of output, but will affect the composition of output.
• D)affect both the level and composition of output.

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Definitions:

External Attributions

The process of inferring that a person's behavior is due to situational factors, rather than aspects of the individual themselves.

Internal Attributions

Internal attributions refer to the explanation of an individual's behavior as due to personal factors, such as traits, abilities, or feelings.

Stable Attributions

The tendency to explain an individual's behavior as resulting from consistent and unchanging factors.

Self-serving Bias

A cognitive bias that involves perceiving oneself in a way that is overly favorable, such as attributing successes to personal attributes but failures to external factors.