When Net Taxes Increase and Government Purchases Decrease

question 137

Multiple Choice

When net taxes increase and government purchases decrease,

• A)the price level will rise
• B)the money supply must rise
• C)the aggregate demand curve shifts leftward
• D)output and employment both rise
• E)the aggregate supply curve shifts leftward

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Definitions:

Price Ceiling

A government-imposed limit on how high a price can be charged for a product, good, or service.

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity of the good that suppliers are willing to sell.

Gasoline

A volatile flammable liquid derived from crude oil or natural gas, used primarily as fuel in internal combustion engines.

Price Ceiling

a government-imposed limit on how high a price can be charged for a product, service, or commodity, typically to protect consumers from excessive costs.