Question: A tax cut increases _______. A. Aggregate demand but has no effect on aggregate supply B. Aggregate demand because it increases disposable income and increases

A tax cut increases _______.

A. Aggregate demand but has no effect on aggregate supply

B. Aggregate demand because it increases disposable income and increases aggregate supply because it is an incentive to supply more labor

C. Aggregate demand because it increases consumption expenditure and decreases aggregate supply because labor productivity falls

D. Aggregate supply but has no effect on aggregate demand

Step by Step Solution

★★★★★

3.40 Rating (162 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

B A tax cut in... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Document Format (2 attachments)

PDF file Icon

1448_6054778c37cb8_660995.pdf

180 KBs PDF File

Word file Icon

1448_6054778c37cb8_660995.docx

120 KBs Word File

Students Have Also Explored These Related Foundations Macroeconomics Questions!

Q:

Suppose the government reduces taxes by $20 billion, that there is no crowding out, and that the marginal propensity to consume is . a. What is the initial effect of the tax reduction on aggregate...

Q:

Multiple Choice Questions: 1. The largest component of aggregate demand is? a. Government purchases. b. Net exports. c. Consumption. d. Investment. 2. A reduction in personal income taxes, other...

Q:

Multiple Choice Questions: 1. The federal government buys $20 million worth of computers from Dell. If the MPC is 0.60, what will be the impact on aggregate demand, other things being equal? a....

Q:

____40.The opportunity cost of holding excess reserves will be lower at an 8 percent federal funds rate in comparison to a 10 percent federal funds rate. TRUE OR FALSE ____44.The rate of interest...

Q:

16 A personal tax cut will shift: Aggregate Demand curve to the left Aggregate Demand curve to the right Aggregate Supply curve to the left Aggregate Supply curve to the right

Q:

An economy is currently in a long run equilibrium where SRAS= LRAS= AD. Suppose that real rate of interest decreases realrateofinterestdecreases, which of the following is the best explanation of...

Q:

1. A U.S. five dollar bill is an example of fiat money. M2. certificate money. commodity money. standard money. 2. As a result of a recession, citizens all over the nation are withdrawing their...

Q:

PLEASE read the below questions carefully and provide with correct answers many tutors are providing with wrong answer please help me . I beg you please provide with correct answers i begg you Does...

Q:

Write 2 paragraphs about KEYNESIAN SUPPLY SHOCKS AND HAYEKIAN SECONDARY DEFLATIONS article. No max word count, page count, or formatting requirements but must be submit to my tutor's work as my own....

Q:

The sovereign debt crisis was an additional challenge for the ECB, in addition to the frozen interbank market after the global financial crisis as started in 2007. Why did the sovereign debt crisis...

Q:

MTN Ghana Limited purchased a photocopier machine at ¢60,000 in January 2020. The machine has an estimated useful life of 5 years after which the company expects to sell it for ¢10,000....

Q:

Do you think some form of international experience is key to your long-term career success? Have you ever considered taking a position abroad? Why or why not? Break into small groups with your...

Q:

Item 2 1 3 . 3 points eBook Item 2 1 Which of these investors earn returns from receiving dividends and from stock price appreciation? Multiple Choice bondholders stockholders investment bankers...

Q:

3. Suppose corn farming in the United States can be represented by a competitive industry. Describe how this industry, currently in long-run equilibrium, would adjust to an increase in demand for...

Q:

The United States claims that Canada subsidizes the production of softwood lumber and that imports of Canadian lumber damage the interests of U.S. producers. The United States has imposed a tariff on...

Q:

The United States claims that Canada subsidizes the production of softwood lumber and that imports of Canadian lumber damage the interests of U.S. producers. The United States has imposed a tariff on...

Q:

If firms in oligopoly form a cartel, it will likely break down because _____. A. Firms cannot agree on how to share the economic profit B. The price set by the cartel is too low C. With price...

Q:

The financial statements of BNSF Railway Company report total revenues of $22,014 million, accounts receivable of $1.298 million for the current year and $1.168 million for the prior year. The...

Q:

Bethesda Mining Company reports the following balance sheet information for 2018 and 2019 145 BETHESDA MINING COMPANY Balance Sheets as of December 31, 2018 and 2019 2018 2019 2018 2019 Assets...

Q:

Part 1 Attempt 1/5 for 10 pts. The P/E ratio measures the growth rate of dividends the price an investor pays for $1 of earnings the expected capital gain the price equivalent of $1 of earnings...