Which component of GDP will be affected if the government decreases the income tax rate?
A) Consumption
B) Net exports
C) Government spending
D) A change to the income tax rate will not affect any of these components.

Question

Quizplus · Accepted Answer

A decrease in income tax rates will increase disposable income, which will increase consumption spending. Therefore, the component of GDP affected will be consumption.

Which Component of GDP Will Be Affected If the Government