Use the Following to Answer Questions

question 110

Multiple Choice

Use the following to answer questions:
-(Figure: Fiscal Policy II) Refer to Figure: Fiscal Policy II. Suppose that this economy is in equilibrium at E₁. If there is an increase in taxes, _____ will shift to the _____, causing a(n) _____ in the price level and a(n) _____ in real GDP.

• A) AD_1; left; increase; decrease
• B) AD_1; left; decrease; decrease
• C) AD_2; right; increase; increase
• D) AD_2; right; decrease; increase

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Definitions:

Air Quality

The condition of the air based on the amount of pollution present; influences environmental and human health.

Water Pollution

Contamination of water bodies such as lakes, rivers, oceans, and groundwater caused by substances harmful to living organisms.

Environmental Regulation

Laws, policies, and regulations that are designed to protect the environment and regulate the impact of human activities on it.

Property Rights

Legal rights to possess, use, and dispose of assets including real property and intellectual property.