Starting from Short-Run Equilibrium,the Following Occurs: Personal Income Taxes Rise

question 96

Multiple Choice

Starting from short-run equilibrium,the following occurs: personal income taxes rise and foreign real national income rises.What is the effect on the price level and Real GDP in the short run?

• A) The price level rises and Real GDP falls.
• B) The price level falls and Real GDP falls.
• C) The price level rises and Real GDP rises.
• D) The price level falls and Real GDP rises.
• E) There is not enough information to answer this question.

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Definitions:

Ceteris Paribus

A Latin phrase meaning "all other things being equal," used in economics to isolate the effect of one variable changing while holding others fixed.

Comparative Advantage

In economics, comparative advantage refers to the ability of a country or individual to produce a particular good or service at a lower opportunity cost than its competitors.

Taxi Parts

Components or spares used in the maintenance and repair of taxicabs.

Oranges

A citrus fruit that is a common source of vitamin C, available in several varieties and used in both food and beverages.