A tax cut on capital income
A) does not affect potential GDP because the interest rate affects aggregate expenditure only.
B) increases potential GDP because the supply of loanable funds increases.
C) does not affect potential GDP because it has no impact on the supply of labour.
D) increases potential GDP because households have more disposable income to spend.
E) increases potential GDP because workers have greater incentives to work.
Correct Answer:
Verified
Q33: The Laffer curve shows that increasing _
Q34: The Laffer curve is the relationship between
A)government
Q35: An income tax cut that provides a
Q36: An increase in income taxes
A)decreases potential GDP
Q37: An increase in income tax _ potential
Q39: Consider all the effects of fiscal policy.A
Q40: Suppose the tax rate on interest income
Q41: Currently the government of Ricardia has outlays
Q42: Suppose that in China, investment is ¥400
Q43: Currently the government of Ricardia has outlays
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