Looking at the supply-side effects on aggregate supply shows that a tax increase on labour income
A) weakens the incentive to work.
B) decreases potential GDP.
C) increases potential GDP because people work more to pay the higher taxes.
D) Both answers A and B are correct.
E) None of the above is correct.
Correct Answer:
Verified
Q42: Q48: A fiscal stimulus works to close a Q53: An increase in income tax shifts the Q56: In the labour market, the income tax Q58: There are four limitations to the effectiveness Q59: The supply-side effects show that an income
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