An income tax cut that provides a greater incentive to work than an alternative tax cut will result in comparatively

Question

Quizplus · Accepted Answer

An income tax cut that provides a greater incentive to work will result in higher potential GDP as people will be motivated to work more and earn more. This increased economic activity and output will lead to a lower price level as well, as the supply of goods and services increases. Therefore, option B is the correct choice.

An Income Tax Cut That Provides a Greater Incentive to Work