For this exercise, assume there are no employer or employee misperceptions and there is no stickiness...
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For this exercise, assume there are no employer or employee misperceptions and there is no stickiness in wages or prices. If there is an increase in tax rates, which of the following correctly describes the outcome? O The price level will decrease, real GDP will decrease, and unemployment will increase. O The price level will increase, real GDP will decrease, and unemployment will increase. O The price level will decrease, but no predictions can be made regarding possible changes in real GDP or unemployment. O The price level will decrease, real GDP will stay the same, and unemployment will stay the same. O The price level will increase, real GDP will increase, and unemployment will decrease. For this exercise, assume there are no employer or employee misperceptions and there is no stickiness in wages or prices. If there is an increase in tax rates, which of the following correctly describes the outcome? O The price level will decrease, real GDP will decrease, and unemployment will increase. O The price level will increase, real GDP will decrease, and unemployment will increase. O The price level will decrease, but no predictions can be made regarding possible changes in real GDP or unemployment. O The price level will decrease, real GDP will stay the same, and unemployment will stay the same. O The price level will increase, real GDP will increase, and unemployment will decrease.
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