The graph below refers to a significant increase in individual income taxes, taking them to their highest level in 50 years. Which of the following is likely to result?

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
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Chapter1: Making Economics Decisions
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QUESTION 10
The graph below refers to a significant increase in individual income taxes, taking them to their highest level in 50 years. Which of the
following is likely to result?
Price
Level
P₁
P₂
Y2 Y
AD'
AS
AD
Real National
Income
a. cyclical unemployment will decrease
b. inflationary pressures will be greater
c. the economy will experience lower economic growth
O d. input prices will rise in the short run
Transcribed Image Text:QUESTION 10 The graph below refers to a significant increase in individual income taxes, taking them to their highest level in 50 years. Which of the following is likely to result? Price Level P₁ P₂ Y2 Y AD' AS AD Real National Income a. cyclical unemployment will decrease b. inflationary pressures will be greater c. the economy will experience lower economic growth O d. input prices will rise in the short run
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