Suppose the economy is at a short-run equilibrium with real GDP reater than potential GDP . Which of the following fiscal policies would decrease real GDP and the price level?
A) an increase in government expenditure
B) an increase in taxes
C) a decrease in taxes
D) None of the above answers is correct.

Question

Quizplus · Accepted Answer

An increase in taxes would reduce aggregate demand and decrease real GDP and the price level.

Suppose the Economy Is at a Short-Run Equilibrium with Real