Starting from short-run equilibrium, the following occurs: personal income taxes are cut, business taxes are cut, and labor productivity rises. What is the effect on the price level and Real GDP in the short run?
A) Real GDP rises and the price level necessarily falls.
B) Real GDP rises and the price level necessarily rises.
C) Real GDP falls and the price level necessarily remains the same.
D) Real GDP rises and the effect on the price level cannot be determined.
E) Real GDP rises and the price level necessarily remains the same.
D
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Based on the above table, an open market operation in which the Fed purchased $100,000 of government securities would
A) lead to a maximum potential expansion of the money supply of $1 million. B) create a reserve deficiency for the banking system. C) cause demand deposits to fall by $100,000. D) lead to a maximum potential expansion of the money supply of $100,000.
Explain how GDP is measured according to the expenditure and income approaches
What will be an ideal response?