Which of the Following Scenarios Could Result in a Recession

question 140

Multiple Choice

Which of the following scenarios could result in a recession?

• A) Aggregate demand decreases,and wages are flexible.
• B) Aggregate demand decreases,and wages are sticky.
• C) Aggregate demand increases,and wages are flexible.
• D) Aggregate demand increases,and wages are sticky.

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Definitions:

Regressive Tax

A tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases, disproportionately affecting low-income earners.

General Sales Taxes

A tax imposed on sales transactions, usually calculated as a percentage of the sales price and collected by the seller at the point of purchase.

Personal Income Taxes

Taxes levied on the income of individuals, typically graduated so that higher income levels are taxed at higher rates.

Progressive

Describes a tax system where the tax rate increases as the taxable base amount increases, typically aimed at reducing income inequality.