If the Expected Price Level Increases at the Same Time

question 79

Multiple Choice

If the expected price level increases at the same time that the federal government cuts taxes, in the short run

• A)aggregate output and the price level will both increase.
• B)aggregate output will increase, but the price level will fall.
• C)aggregate output and the price level will both fall.
• D)the price level will increase, but aggregate output may either increase or decrease.

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Definitions:

Civil Service Protections

Safeguards for government employees that ensure stability, fairness in hiring and firing, and protection from political pressures.

Hatch Act

A U.S. federal law enacted in 1939 that restricts the political activities of federal employees to ensure a nonpartisan federal workforce.

Political Campaigns

Organized efforts to influence the decision-making process within a specific group, often related to elections.

Federal Employees

Workers who are employed by the federal government of a country, undertaking tasks and responsibilities dictated by governmental agencies.