Equal Increases in Government Expenditures and Taxes Will

question 53

Multiple Choice

Equal increases in government expenditures and taxes will:

• A) cancel each other out so that the equilibrium level of output will remain unchanged.
• B) lead to an equal decrease in the equilibrium level of output.
• C) lead to an equal increase in the equilibrium level of output.
• D) lead to an increase in the equilibrium level of real GDP output that is larger than the initial change in government expenditures and taxes.

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Definitions:

Uncertainty-Identity Theory

A social psychological theory suggesting that people join and identify with groups in order to reduce feelings of uncertainty about themselves and the world.

Social Identity Processes

The mechanisms through which individuals develop and maintain their social identity, including categorization, identification, and comparison with other groups.

Uncertainty

Uncertainty involves situations where the outcomes, probabilities, or implications are unclear, often leading to ambiguity and indecision.

Social Mobility Belief System

Belief that intergroup boundaries are permeable. Thus, it is possible for someone to pass from a lower-status into a higher-status group to improve social identity.