Refer to the above figure. If the economy is currently at point C, then an increase in taxes will lead to
A) an increase in the price and an increase in real GDP.
B) an increase in the price and a decrease in real GDP.
C) a decrease in the price and a decrease in real GDP.
D) a decrease in the price and an increase in real GDP.
C
You might also like to view...
A decrease in the dollar price of foreign currency would cause
a. the nation's imports to increase and exports to decline. b. the nation's exports to increase and imports to decline. c. both imports and exports to decline. d. both imports and exports to rise.
A general rise in prices is known as
a. fixed incomes b. inflation c. capitalism d. voluntary exchange
If other factors are held constant, an increase in the price level
A. induces people to spend their money faster. B. causes the real value of the money to increase. C. causes desired net export spending to rise. D. causes desired net export spending to fall.
The collapse of stock prices in September of 2008 was
A. totally irrational and unjustified by any fundamental determinants of stock values. B. the result of an elaborate conspiracy by greedy manipulators to ruin the Big Three automakers. C. an inescapable consequence of the rebound of 2006-2007. D. largely due to the sharply increased uncertainty regarding the strategically-critical financial sector.