A Tax Cut That Affects Both Aggregate Demand and Potential

question 63

Multiple Choice

A tax cut that affects both aggregate demand and potential output is predicted to _____ the long-run equilibrium level of output, while inflation _____.

• A)increase; increases
• B)increase; decreases
• C)increase; may increase, decrease, or remain unchanged
• D)decrease; decrease

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Definitions:

Constructivism

A theory of learning that emphasizes the role of individuals in constructing their own understanding and knowledge of the world, through experiencing things and reflecting on those experiences.

Critical Realist

An advocate or adherent of critical realism, a philosophical approach that believes the nature of reality is independent of human thoughts and beliefs but that our understanding of it is socially constructed.

Accuracy of Personality Judgments

The degree to which assessments or perceptions of others' personalities are consistent with their actual behavior and self-reports.