ʺObama Considers Delaying Tax Increaseʺ
ʺU)S. President-elect Barack Obama is considering delaying his proposal to repeal the Bush tax cuts for the wealthiest Americans in light of the economic downturn.ʺ
Obamaʹs possible decision to delay the tax increase recognizes the fact that a tax increase will_______disposable income and _________real GDP.

Question

Quizplus · Accepted Answer

A tax increase would decrease disposable income for Americans, leading them to spend less money and ultimately decreasing real GDP. Delaying the tax increase would therefore provide some stimulus to the economy in the short-term.