An increase in the income tax rate _________employment and_________ potential GDP.

Name: An increase in the income tax rate _________employment and_________ potential GDP.
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Question

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An increase in income tax rate lowers the incentive for individuals and businesses to work, invest and save. Therefore, it reduces aggregate demand leading to lower real GDP and employment. Hence, an increase in the income tax rate decreases both employment and potential GDP.

An Increase in the Income Tax Rate _________Employment And_________ Potential

An Increase in the Income Tax Rate _Employment And_ Potential