Holding Other Factors Constant, If a Tax Increase Moves the Government

question 96

Multiple Choice

Holding other factors constant, if a tax increase moves the government budget from deficit to surplus, then the real interest rate will ________ and the equilibrium quantity of national saving and investment will ________.

• A)increase; increase
• B)decrease; decrease
• C)increase; not change
• D)decrease; increase

---

Definitions:

Total Fixed Costs

The sum of all costs that do not change with the level of output, such as rent, salary, and insurance premiums.

Earrings

Jewelery pieces worn on the ear, typically fastened through a hole pierced in the earlobe or another external part of the ear.

Average Total Cost

The total cost of production divided by the quantity of output produced, representing the cost per unit.

Total Cost

The sum of all expenses incurred in the production of a good or service, including both fixed and variable costs.