In the Short Run, a Tax Increase

question 29

Multiple Choice

In the short run, a tax increase

• A) shifts the DD curve to the right, increases output and appreciates the currency.
• B) shifts the AA curve to the left, increases output and depreciates the currency.
• C) shifts the AA curve to the left, decreases output and depreciates the currency.
• D) shifts the AA curve to the left, increases output and appreciates the currency.
• E) shifts the DD curve to the left, decreases output and depreciates the currency.

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Definitions:

Supplies

Materials or items which are used in the operation of a business or needed in the production process.

Services

Economic activities that are intangible, are not stored, and do not result in ownership transfer from the service provider to the service receiver.

Double-Entry

An accounting principle where every transaction is entered twice, as a debit in one account and a credit in another, to keep the accounting equation balanced.

Accounting Equation

The fundamental principle of accounting that represents the relationship between assets, liabilities, and owner's equity: Assets = Liabilities + Owner's Equity.