Starting from Long-Run Equilibrium, a Large Tax Increase Will Result

question 56

Multiple Choice

Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.

• A)expansionary; higher; potential
• B)recessionary; lower; lower
• C)expansionary; lower; potential
• D)recessionary; lower; potential

---

Definitions:

Advocate

A person who publicly supports or recommends a particular cause or policy.

Discussing

The act of talking about something with another person or a group of people to exchange ideas or opinions.

Perceptions Clarification

The process of seeking to understand and rectify misinterpretations or misconceptions within interpersonal communication.

Conflict Resolution

The process of resolving a dispute or disagreement through communication, negotiation, and problem-solving.