An increase in taxes when the economy is above full employment aggregate demand and real GDP, and the price level .

Question options :

A. increases; falls

B. decreases; falls

C. does not change; does not change

D. increases; rises

B. decreases; falls

Explanation:

let us understand this by looking at the logic behind it. First when the economy is at full employment, there is high demand since there will be increase in money supply through increased circulation from salaries and wages. If government increases taxes, this will reduce purchasing power as money supply will be reduced and therefore demand will be reduced. Also price will fall since according to the Law of demand and supply, if demand is more than supply, price will increase

answer; human resource management.(hrm);