In the AS/AD model, in the short run, monetary policy affects:
A. only inflation.
B. both inflation and real output.
C. only real output.
D. neither inflation nor real output.
Answer: B
Economics
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A cut in the income tax rate ________ the tax wedge and ________ employment, saving, and investment
A) decreases; increases B) increases; increases C) does not change; increases D) decreases; does not change E) increases; decreases
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The law of increasing relative costs, depicted by the concavity of the production opportunities frontier, is most closely related to the
a. downward slope of the demand curve. b. upward slope of the demand curve. c. downward slope of the supply curve. d. upward slope of the supply curve.
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