Once supply-side effects are taken into account,income tax cuts can change i.the supply of labour.
Ii)potential GDP.
Iii)the growth rate of potential GDP.

Question

Quizplus · Accepted Answer

Income tax cuts can increase the incentive for individuals to work, thereby increasing the supply of labor. This, in turn, can lead to an increase in potential GDP as more labor can lead to an increase in productivity and economic output. Therefore, income tax cuts can affect both the supply of labor and potential GDP. However, it is not guaranteed that income tax cuts will affect the growth rate of potential GDP.

Once Supply-Side Effects Are Taken into Account,income Tax Cuts Can