Question

Which of the following would increase real GDP in the short run?

1 An increase in price level

2 An Increase in property tax

3 Building new public bridges

4 All proposed answer options are correct

The aggregate supply curve shifts left if

1 the government increases sales taxes

2 there is a technological innovation allowing factories to produce goods more efficiently

3 None of the proposed answer options is correct

4 the government removes some environmental regulations that limit production methods

The US is the destination for around 50% of Canadian exports. Holding other factors fixed, a recession in the U.S. should cause the Canadian:

1. aggregate price level to fall and real GDP to rise

2. aggregate price level to rise and real GDP to fall

3 aggregate price level to rise and real GDP to rise

4 aggregate price level to fall and real GDP to fall

Answer 1

2. An Increase in property tax would increase real GDP in the short run.

Explanation:

An increase in the property tax reduces the consumption spending of the household, as a result aggregate demand falls with a fall in price. So the real GDP increases.'

• Real GDP adjusted with inflation so when price increases real GDP falls.
• Building new public bridges will increase the government spending, aggregate demand increases which leads to increase in price real GDP falls.