An Increase in Taxes Lowers Income

Multiple Choice

An increase in taxes lowers income:

A) and the interest rate in the short run but leaves both unchanged in the long run.
B) in the short run but leaves it unchanged in the long run, while increasing consumption and lowering investment.
C) in the short run but leaves it unchanged in the long run, while lowering consumption and increasing investment.
D) and the interest rate in both the short run and in the long run.