A Decrease in Autonomous Net Taxes

question 53

Multiple Choice

A decrease in autonomous net taxes

• A)increases GDP as much as an equal decrease in government purchases
• B)increases GDP less than an equal increase in government purchases
• C)decreases GDP more than an equal decrease in government purchases
• D)changes GDP in an unpredictable manner
• E)has no effect on GDP

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Definitions:

Value of Money

The purchasing power of monetary units, indicating how much goods or services one unit of money can buy; it generally decreases with inflation.

Money Demand

The desire of households and firms to hold cash for the purposes of transactions, precaution, and speculation.

Surplus of Money

Surplus of Money occurs when the supply of money in an economy exceeds the demand, potentially leading to lower interest rates and increased spending.

Vertical Axis

In a graph or chart, this axis represents the range of values or criteria that are measured upward and downward.