In which case can we be sure that real GDP and the price level rise in the short run?
A)foreign economies expand and taxes increase.
B)foreign economies expand and taxes decrease.
C)foreign economies contract and taxes decrease.
D)foreign economies contract and taxes increase.

Question

Quizplus · Accepted Answer

When foreign economies expand, there is an increase in demand for exports, boosting domestic production and real GDP. A decrease in taxes increases disposable income, further increasing consumption and aggregate demand, leading to a rise in the price level.

In Which Case Can We Be Sure That Real GDP