A cut in marginal tax rates would:
A) increase the price level and real GDP in the short run if it has no effect on short-run aggregate supply.
B) increase the price level and real GDP in the short run, even if possible aggregate supply effects are included.
C) increase real GDP in the short run, but there is an indeterminate effect on the price level if there is no supply-side effect on aggregate supply.
D) increase real GDP in the short run, but there is an indeterminate effect on the price level if supply-side effects on aggregate supply are included.
Correct Answer:
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