Solved

Use the Following to Answer Questions

Question 18

Multiple Choice

Use the following to answer questions:
Figure: Fiscal Policy II Use the following to answer questions: Figure: Fiscal Policy II -(Figure: Fiscal Policy II) Look at the figure Fiscal Policy II. Suppose that this economy is in equilibrium at E<sub>1</sub>. If there is an increase in taxes, _____ will shift to the _____, causing a(n) _____ in the price level and a(n) _____ in real GDP. A) AD<sub>1;</sub> left; increase; decrease B) AD<sub>1;</sub> left; decrease; decrease C) AD<sub>2;</sub> right; increase; increase D) AD<sub>2;</sub> right; decrease; increase
-(Figure: Fiscal Policy II) Look at the figure Fiscal Policy II. Suppose that this economy is in equilibrium at E1. If there is an increase in taxes, _____ will shift to the _____, causing a(n) _____ in the price level and a(n) _____ in real GDP.


A) AD1; left; increase; decrease
B) AD1; left; decrease; decrease
C) AD2; right; increase; increase
D) AD2; right; decrease; increase

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Q13: Real GDP equals $200 billion, the government

Q14: For a marginal propensity to consume of

Q15: Suppose that real GDP is $1,500, potential

Q16: Funding for Social Security and Medicare:<br>A)must come

Q17: Expansionary fiscal policies:<br>A)make the budget surplus smaller.<br>B)make

Q19: Suppose the economy is in a recessionary

Q20: Use the following to answer questions :<br>Figure:

Q21: As a country's public debt grows, the

Q22: Time lags make:<br>A)fiscal policy more effective than

Q23: When the government borrows funds to pay