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MMLU / Equilibrium real GDP is far below full employment and the government lowers…

Problem

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question

Equilibrium real GDP is far below full employment and the government lowers household taxes. Which is the likely result?

choices

  1. Unemployment falls with little inflation.
  2. Unemployment rises with little inflation.
  3. Unemployment falls with rampant inflation.
  4. Unemployment rises with rampant inflation.

subject

high_school_macroeconomics

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Official source

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