Income taxes create a wedge between the wage rate paid by ________ and received by workers and thereby ________ employment and ________ potential GDP
A) firms; raise; decrease
B) households; lower; decrease
C) firms; lower; decrease
D) firms; lower; increase
E) firms; raise; increase
C
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Which of the following is not an example of a demand shock?
a. A reduction in government spending b. An increase in income tax rates c. A change in oil prices. d. A money supply increase. e. An increase in government spending.
In the aggregate demand-aggregate supply model, the short-run effects of an unanticipated increase in the money supply will be
a. lower real interest rates and an increase in aggregate demand. b. higher real interest rates and an increase in aggregate demand. c. lower real interest rates and a reduction in aggregate demand. d. higher real interest rates and a reduction in aggregate demand.