If the Expected Price Level Increases at the Same Time

question 79

Multiple Choice

If the expected price level increases at the same time that the federal government cuts taxes, in the short run

• A)aggregate output and the price level will both increase.
• B)aggregate output will increase, but the price level will fall.
• C)aggregate output and the price level will both fall.
• D)the price level will increase, but aggregate output may either increase or decrease.

---

Definitions:

Commitment

The state or quality of being dedicated to a cause, activity, or goal.

Optimistic Biases

The tendency to believe that we are less likely to experience negative events and more likely to experience positive events compared to others.

Pessimistic Biases

A cognitive tendency to anticipate negative outcomes or to view situations more negatively than they may actually be.

Easterners

Typically refers to individuals from East Asian cultures, often emphasizing values such as community, harmony, and relational interdependence.