Once supply side effects are taken into account,tax cuts for labor income can change I. the supply of labor
II) potential GDP.

Question

Quizplus · Accepted Answer

Tax cuts for labor income incentivize individuals to work more, leading to a shift in the supply of labor. This increase in labor supply can then result in an increase in potential GDP as more goods and services are being produced. Therefore, both I and II are affected by tax cuts for labor income when supply side effects are considered.

Once Supply Side Effects Are Taken into Account,tax Cuts for Labor