Consider a Tax Cut Which Affects Not Only Consumer Disposable

question 185

Multiple Choice

Consider a tax cut which affects not only consumer disposable income,but also after-tax earnings from labor supplied to labor markets and from financial assets acquired through saving.In the long run we would expect this tax cut to

• A)decrease the price level and increase the level of real GDP.
• B)increase both the price level and the level of real GDP.
• C)decrease the level of real GDP.
• D)decrease the price level.

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Definitions:

Served

To have provided a service or met a need, often in a context of food, legal documents, or information.

Pulmonary Trunk

A major blood vessel that transports deoxygenated blood from the right ventricle to the lungs.

Deoxygenated Blood

Blood that is rich in carbon dioxide and low in oxygen. It returns to the lungs for oxygenation.

Lungs

The primary organs of the respiratory system, responsible for gas exchange where blood is oxygenated and carbon dioxide is removed.