"Demand-Side Fiscal Policy Is Capable of Changing Real GDP

question 89

Multiple Choice

"Demand-side fiscal policy is capable of changing Real GDP." This statement would be most likely to be said by an economist who believes that

• A) the AS curve is vertical.
• B) the AS curve is upward sloping.
• C) complete crowding out exists.
• D) there is little,if any,crowding out.
• E) b and d

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Definitions:

Progressive Tax

A tax system where the tax rate increases as the taxable income or base increases, leading to a higher tax burden on wealthier individuals or entities.

Cigarette Tax

A levy imposed by governments on the sale of cigarettes to reduce consumption and generate revenue, often used for public health initiatives.

Proportional Tax

A tax system where the tax rate remains constant regardless of the amount subject to taxation.

Vertical Equity

A principle of fairness in taxation that dictates taxpayers with a greater ability to pay should contribute more in taxes.