Other Things Being Equal, a Reduction in Taxes Will

question 60

Multiple Choice

Other things being equal, a reduction in taxes will

• A)lead to a reduction in the long run aggregate supply curve as businesses enjoy greater profits.
• B)influence the short run aggregate supply curve but not the aggregate demand curve.
• C)lead to a corresponding reduction in interest rates increasing the crowding out effect.
• D)cause an increase in aggregate demand due to increases in consumption, investment, or net exports.

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Definitions:

Permits

Authorizations or licenses granted by an authority to carry out specific actions.

Flexion

The action of bending a limb or joint, reducing the angle between the bones of the limb at the joint.

Bending

The action or result of making something straight become curved or angled.

Process

A projection or outgrowth on a bone or on body tissue.