In an article regarding Bangladesh's economy, the author suggests that the government ..."[g]ive double tax breaks on investment dollars. Give tax break to R&D [research and development]. Give tax break on donations to educational institutions."
Www)groundreport.com, March 24, 2008
As a result of enacting the policies, the AE curve will shift ________ and the AD curve will shift ________.

Question

Quizplus · Accepted Answer

Giving double tax breaks on investment dollars, tax breaks to R&D and tax breaks on donations to educational institutions will encourage more investment and innovation, which will increase aggregate supply (AS) and shift the AS curve upward. In turn, this will lead to an increase in GDP and employment, causing the aggregate demand (AD) curve to shift rightward. Hence, the correct answer is B, upward shift in the AS and AD curves.

In an Article Regarding Bangladesh's Economy, the Author Suggests That