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Assume that the economy is initially operating at the natural level of output. An increase in taxes will cause which of the following? a. a
Assume that the economy is initially operating at the natural level of output. An increase
in taxes will cause which of the following?
a. a reduction in output and no change in the aggregate price level in the short run
b. a reduction in employment and no change in the nominal wage in the short run
c. a decrease in investment in the medium run
d. an increase in the aggregate price level, no change in output and no change in the interest rate in the medium run
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