Suppose that the income tax rate is reduced by the federal government and simultaneously a recession hits

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Suppose that the income tax rate is reduced by the federal government and simultaneously a recession hits causing the economy to move below its potential output, this will:

raise both the cyclical and structural deficits.

reduce the cyclical deficit but raise the structural deficit.

reduce both the cyclical and structural deficits.

raise the cyclical deficit but reduce the structural deficit.

Related Book For answer-question

Microeconomics An Intuitive Approach with Calculus

ISBN: 978-0538453257

1st edition

Authors: Thomas Nechyba

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Posted Date: Jan 08, 2024 06:43 AM

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Suppose that the income tax rate is reduced by the federal government and simultaneously a recession hits

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A structural deficit exists when a governments revenues in a state of full or nearly full employm... View the full answer

Microeconomics An Intuitive Approach with Calculus

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