If Net Taxes Increase and Government Purchases Decrease

question 20

Multiple Choice

If net taxes increase and government purchases decrease,

• A)the price level will rise
• B)the money supply must increase
• C)the aggregate demand will shift rightward
• D)output and employment will fall
• E)there will be a federal budget deficit

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Definitions:

Satisfaction

The feeling of pleasure or fulfillment that comes from meeting or exceeding expectations.

Economic Self-interest

The motivation to act in a way that results in the greatest personal benefit or profit.

Economic Behavior

The study of how individuals make decisions to allocate resources under conditions of scarcity.

Selfishness

A trait characterized by concern with one's own interests, often disregarding others' well-being or desires.