If the expected price level decreases at the same time that the federal government cuts taxes, in the short run aggregate output and the price level will both fall. the price level may either increase or decrease and aggregate output will increase. aggregate output and the price level will both increase. aggregate output will increase, but the price level will fall.
If the expected price level decreases at the same time that the federal government cuts taxes, in the short run aggregate output and the price level will both fall. the price level may either increase or decrease and aggregate output will increase. aggregate output and the price level will both increase. aggregate output will increase, but the price level will fall.
Chapter8: Macroeconomic Equilibrium: Aggregate Demand And Supply
Section: Chapter Questions
Problem 12E
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