In Which Case Can We Be Sure That Real GDP

question 8

Multiple Choice

In which case can we be sure that real GDP and the price level rise in the short run?

• A)foreign economies expand and taxes increase.
• B)foreign economies expand and taxes decrease.
• C)foreign economies contract and taxes decrease.
• D)foreign economies contract and taxes increase.

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Definitions:

Expected Inflation Rate

The anticipated rate at which the general level of prices for goods and services will rise over a period, affecting purchasing power.

Consumption Sector

A segment of the economy focused on the purchasing and use of goods and services by individuals and households.

Production Sector

The segment of the economy concerned with the production of goods and services, including agriculture, manufacturing, and construction.

Product Purchases

Transactions involving the buying of goods or services for commercial purposes or for use in production.