Which of the Following Would Cause Prices and Real GDP

question 82

Multiple Choice

Which of the following would cause prices and real GDP to rise in the short run?

• A)an increase in the expected price level
• B)an increase in the money supply
• C)a decrease in the capital stock
• D)None of the above is correct.

---

Definitions:

Laffer Curve

An economic theory suggesting there exists an optimal tax rate that maximizes government revenue without discouraging people from working or investing.

Tax Rate

The percentage at which an individual or corporation is taxed.

Tax Receipts

The revenue collected by the government through all forms of taxes, such as income tax, corporate tax, and sales tax.

Fiscal and Monetary Policies

Government strategies used to influence economic conditions, with fiscal policy involving taxation and spending decisions and monetary policy concerning the control of the money supply and interest rates.