If the Government Raises Taxes ________

question 16

Multiple Choice

If the government raises taxes ________.

• A)planned expenditures fall
• B)equilibrium output falls
• C)the IS curve shifts to the left
• D)all of the above
• E)none of the above

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Definitions:

Additional Cost

The extra cost that is incurred when an economic agent decides to increase the level of an activity or purchase.

Labor Market

The marketplace in which individuals offer their labor for employment and employers seek to hire labor to fill available positions.

Resource Market

The market where resources or inputs such as labor, capital, and raw materials are bought and sold.

Rational Decision Maker

An individual or entity that makes choices that maximize benefits while minimizing costs, based on available information and logical analysis.