Consider a Tax Cut That Affects Not Only Consumer Disposable

question 252

Multiple Choice

Consider a tax cut that affects not only consumer disposable income, but also after-tax earnings from labour supplied to labour 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 real GDP.
• B)increase both the price level and the level of real GDP.
• C)increase the level of real GDP.
• D)increase the price level.
• E)decrease both the price level and real GDP.

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Definitions:

Vet

A professional who practices veterinary medicine, treating diseases, disorders, and injuries in animals.

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Gifts or items given to others during the Christmas holiday as a sign of affection, goodwill, or celebration.

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A fermented alcoholic beverage made from barley, hops, water, and yeast.

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