In a Simple Macro Model with a Constant Price Level,an

question 13

Multiple Choice

In a simple macro model with a constant price level,an increase in the net tax rate causes the AE curve to

• A)shift parallel downward.
• B)shift parallel upward.
• C)rotate downward.
• D)rotate upward.
• E)remain stationary.

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Definitions:

Industry

A classification of businesses that perform similar types of work or produce similar goods and services.

Output

The total amount of goods or services produced by a company or economy.

Marginal Social Cost

Sum of the marginal cost of production and the marginal external cost.

Air Pollutants

Substances in the air that can cause harm to humans and the environment.