Which of the following is likely to occur because of a decrease in marginal tax rates?
A)An increase in aggregate supply because of an increased incentive to work.
B)A decrease in aggregate supply because people cash in their investments.
C)A decrease in aggregate demand because of an increased incentive to work.

Question

Quizplus · Accepted Answer

Decreasing marginal tax rates increases the incentive to work as individuals get to keep more of their earnings. This can lead to an increase in aggregate supply as the labor force grows, and workers become more motivated and productive.

Which of the Following Is Likely to Occur Because of a Decrease