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Question
According to the traditional Keynesian approach, if the government increases taxes, then
A) real Gross Domestic Product (GDP) will fall and the price level will remain constant.
B) real Gross Domestic Product (GDP) will fall but the price level will rise.
C) both real Gross Domestic Product (GDP) and the price level will fall.
D) real Gross Domestic Product (GDP) will remain constant but the price level will rise.
Answer
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