Which of the following will increase macroeconomic equilibrium prices?
A)a decrease in government spending.
B)a decrease in productivity.
C)an increase in taxes.
D)a decrease in input prices.

Question

Quizplus · Accepted Answer

A decrease in productivity will lead to a decrease in supply, which will shift the supply curve to the left, causing an increase in equilibrium price.

Answer: C
 An increase in taxes will decrease disposable income, which will lead to a decrease in demand. This will shift the demand curve to the left, causing a decrease in equilibrium quantity, but an increase in equilibrium price.

Therefore, the correct choice(s) are B and C.

Which of the Following Will Increase Macroeconomic Equilibrium Prices