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In Response to a Negative Supply Shock, the Government Decreases

Question 296

Multiple Choice

In response to a negative supply shock, the government decreases taxes. The MOST likely result of the government's tax decrease is a(n) _____ in unemployment and a(n) _____ in the aggregate price level.


A) decrease; increase
B) decrease; decrease
C) increase; increase
D) increase; decrease

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